How the formula works
Each piece of the formula has a real-world meaning:
How to use this compound interest calculator
- Initial investment — enter the amount you start with (your principal).
- Annual interest rate — the yearly rate of return you expect, e.g. 7% for a long-term stock index fund or 4% for a high-yield savings account.
- Years — how long the money stays invested.
- Recurring contributions (optional) — add a monthly, weekly, bi-weekly, daily, quarterly or yearly deposit. You can even schedule bigger contributions later as your income grows.
- Withdrawals (optional) — take out a fixed amount or a percentage of the balance each year to see how long your money lasts.
The results update instantly: your final balance, total interest earned, total contributed, how many times your money multiplied, an interactive growth chart that compares compound vs. simple interest, and a downloadable year-by-year breakdown.
What is compound interest?
Compound interest is interest on interest. Each period, the interest you earn is added to your balance, so the next period's interest is calculated on a bigger amount. Over short periods the effect is small, but over decades it becomes the dominant source of growth — which is why starting early matters more than starting big.
The compound interest formula
A = P × (1 + r/n)n×t
- A — final amount
- P — principal (initial investment)
- r — annual interest rate as a decimal (7% = 0.07)
- n — number of compounding periods per year (12 for monthly)
- t — number of years
With regular contributions (PMT) made each period, add the future value of those payments:
FV = PMT × [(1 + r/n)n×t − 1] ÷ (r/n)
Compound interest example
Invest $10,000 at 7% per year, compounded annually, for 20 years: A = 10,000 × 1.0720 ≈ $38,697. You earned $28,697 in interest without adding another cent. Add $200 per month (compounded monthly) and the balance grows to roughly $144,600 — of which only $58,000 came out of your pocket.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal, so it grows by the same amount each year in a straight line. Compound interest is paid on the principal plus the interest already earned, so growth accelerates and the gap between the two widens every year. Use the “Compound vs Simple” chart above to see it.
What is the Rule of 72?
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6% it doubles in about 12 years; at 9%, in about 8 years.
Does compounding frequency matter?
Yes. Compounding monthly or daily instead of annually raises the effective annual yield because interest starts earning interest sooner. The difference is small at low rates but grows with higher rates and longer time horizons.
How much do I need to save each month to reach a goal?
Open the Goal planner tab, enter your target amount, time frame and expected return, and it calculates the monthly (or weekly, or yearly) amount you need to invest.
How much do I need to retire?
The Retirement tab starts from the monthly income you want in retirement, adjusts it for inflation, and works backwards to the fund you need and how much to save each month to get there.
Can I use other currencies?
Yes — pick from 26 currencies, including USD, EUR, GBP, CAD, AUD, INR, MXN, BRL and JPY, using the currency selector at the top. The calculator is also available in English, Spanish, Portuguese, French, Chinese, Japanese, Russian, Hindi and Arabic.
This calculator is for educational purposes. Results are estimates that assume a constant rate of return and do not account for taxes, fees or market volatility.
Goal Planner
Enter a target amount and time horizon — we'll calculate how much you need to save.
Rate of return
See what your investment actually earned — even when you added or took out different amounts at different times. Enter the starting balance, every contribution and withdrawal with its date, and the value today.