Compound Interest Calculator – Calculate Investment Growth
See how money grows when interest compounds and you add regular contributions.
About the Compound Interest Calculator
What is the Compound Interest Calculator?
A compound interest calculator shows how an initial deposit plus regular contributions grows over time when returns are reinvested.
Why use this calculator?
Compounding is the engine of long-term wealth. The earlier money is invested, the more time it has to multiply, which is why starting small and starting early beats waiting to invest a larger sum.
How to use it
- Enter your starting principal.
- Add a monthly contribution (leave at 0 if none).
- Enter an expected annual return and the number of years.
- Choose the compounding frequency, then watch the balance grow year by year.
Formula
A = P(1 + r/n)^(nt), with regular deposits added each period.
Real returns are volatile; a fixed rate is a simplification used for illustration.
Frequently Asked Questions
Does compounding frequency matter much?
More frequent compounding earns slightly more, but the difference between monthly and annual compounding is small. The rate and the length of time matter far more.
What is the rule of 72?
Divide 72 by the annual return to estimate the years needed to double your money. At 8%, money doubles roughly every 9 years.
What is compound interest?
Compound interest is interest earned on both your original money and on previously earned interest. Over time it can make savings grow much faster than simple interest.
What is the difference between nominal and effective return?
The nominal return ignores compounding within the year, while the effective (annualised) return accounts for it. The effective figure is usually higher and better reflects real growth.
How does inflation affect my returns?
Inflation erodes purchasing power. The real return is the nominal return minus inflation, so an investment can grow in dollars yet still lose value in what it can buy.
What rate of return should I assume?
A common long-term assumption for a diversified stock portfolio is about 6% to 8% per year after inflation, but returns vary and are never guaranteed.
Does this account for taxes and fees?
Unless stated, the tool shows pre-tax, pre-fee growth. Subtract your fund expense ratio and expected tax rate to estimate what you keep.
How much should I save each month?
A common guideline is 20% of income, but the right number depends on your goals. Work backwards from your target amount and time frame.
What is an emergency fund and how big should it be?
It is cash set aside for unexpected expenses. Most planners suggest three to six months of essential living costs.
Where should I keep short-term savings?
High-yield savings accounts and money-market funds are typical because they are liquid and low risk, even if returns are modest.