Compound Interest Calculator
Project future investment growth with daily, monthly, or annual compounding.
Compound interest is interest calculated not just on your initial deposit, but also on the interest that deposit has already earned - the interest on interest calculator effect. This compound interest calculator projects how an initial deposit plus optional recurring contributions grows over time at a given interest rate and compounding frequency - daily, monthly, quarterly, or annually.
The compounding frequency matters more than most people expect: the same annual rate compounded daily produces a slightly higher return than the same rate compounded annually, because interest starts earning its own interest sooner.
Worked Calculation Examples
| Scenario | Result | Calculation Step |
|---|---|---|
| $5,000 initial, $200/mo deposit for 10 years at 7% | $44,057.48 | Total interest earned is $15,057.48. |
Why Time Matters More Than Rate
Because each period's interest is added to the balance before the next period's interest is calculated, compound growth accelerates the longer money is left untouched - the classic curve where most of the total growth happens in the final years, not the first ones. This is why starting early has an outsized effect: a smaller amount invested for 30 years often outgrows a larger amount invested for only 15, even at the same rate.
How Compounding Frequency Changes Your Return
A 7% annual rate compounded once a year, monthly, and daily will all produce slightly different results on the same principal, because more frequent compounding means interest starts earning interest sooner within each year. The difference is usually small in percentage terms but grows in dollar terms as the balance and time horizon increase. Most savings accounts and CDs compound daily or monthly; many bond and loan calculations use annual compounding as a simplification.
Lump Sum vs. Regular Contributions
This calculator supports both a one-time initial deposit and ongoing monthly contributions, because most real investment growth combines both. A single lump sum grows purely from compounding, while monthly contributions add new principal that then compounds on its own timeline - the combination is why consistent monthly investing, even in modest amounts, can produce substantial growth over a 10-20 year horizon.
How to Use the Compound Interest Calculator
- Open the Compound Interest Calculator and enter the values requested in the input fields.
- Check the units, percentages, dates, or time periods before reading the answer.
- Review the instant result and adjust any value to compare another scenario.
- Use the formula, example, and FAQs below to understand how the compound interest calculator works.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both your original principal and on interest that has already accumulated in previous periods, causing growth to accelerate over time rather than staying constant.
How does compounding frequency affect my return?
More frequent compounding (daily or monthly vs. annually) produces a slightly higher effective return on the same stated interest rate, because interest starts earning its own interest sooner within each period.
What's the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal and stays constant each period. Compound interest is calculated on the principal plus all previously earned interest, so the amount earned grows each period.
How much difference does starting early really make?
A significant one - because growth accelerates over time, money invested a decade earlier can outgrow a larger sum invested later, even at the same interest rate, simply because it has more compounding periods.
Does this calculator account for taxes or inflation?
No, this shows nominal (before-tax, before-inflation) growth. Taxable accounts and real (inflation-adjusted) purchasing power will both reduce the effective return shown here.
What interest rate should I use for stock market investments?
Many long-term planners use a conservative estimate in the 6-8% range for diversified stock investments, reflecting long-run historical averages, though actual year-to-year returns vary considerably and are not guaranteed.
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Last updated: September 29, 2026.