Compound Interest Calculator
See how your money grows with compound interest.
Final Balance
$92,480.05
| Year | Opening | Contributions | Interest | Closing |
|---|---|---|---|---|
| 1 | $10,000.00 | $1,200.00 | $762.16 | $11,962.16 |
| 2 | $11,962.16 | $1,200.00 | $904.00 | $14,066.16 |
| 3 | $14,066.16 | $1,200.00 | $1,056.10 | $16,322.27 |
| 4 | $16,322.27 | $1,200.00 | $1,219.20 | $18,741.46 |
| 5 | $18,741.46 | $1,200.00 | $1,394.08 | $21,335.54 |
| 6 | $21,335.54 | $1,200.00 | $1,581.61 | $24,117.15 |
| 7 | $24,117.15 | $1,200.00 | $1,782.69 | $27,099.84 |
| 8 | $27,099.84 | $1,200.00 | $1,998.31 | $30,298.15 |
| 9 | $30,298.15 | $1,200.00 | $2,229.51 | $33,727.66 |
| 10 | $33,727.66 | $1,200.00 | $2,477.43 | $37,405.09 |
| 11 | $37,405.09 | $1,200.00 | $2,743.28 | $41,348.37 |
| 12 | $41,348.37 | $1,200.00 | $3,028.34 | $45,576.71 |
| 13 | $45,576.71 | $1,200.00 | $3,334.00 | $50,110.71 |
| 14 | $50,110.71 | $1,200.00 | $3,661.77 | $54,972.47 |
| 15 | $54,972.47 | $1,200.00 | $4,013.22 | $60,185.70 |
| 16 | $60,185.70 | $1,200.00 | $4,390.09 | $65,775.78 |
| 17 | $65,775.78 | $1,200.00 | $4,794.20 | $71,769.98 |
| 18 | $71,769.98 | $1,200.00 | $5,227.52 | $78,197.50 |
| 19 | $78,197.50 | $1,200.00 | $5,692.16 | $85,089.66 |
| 20 | $85,089.66 | $1,200.00 | $6,190.40 | $92,480.05 |
How It Works
Compound interest is calculated using the formula A = P(1 + r/n)nt, where P is the principal, r is
the annual interest rate, n is the number of compounding periods per year, and t is the
time in years. With regular contributions, each deposit also earns interest, dramatically
accelerating growth.
Compounding frequency matters: daily compounding yields slightly more than annual
compounding at the same stated rate. The effective annual yield (APY) is (1 + r/n)n − 1 and lets you compare products with
different compounding schedules on equal footing.
Rule of 72: divide 72 by your annual rate to estimate how many years it takes to double your money. At 6%, money doubles in roughly 12 years; at 9%, about 8 years.
The power of starting early: time is the most powerful factor in compound growth. Starting 10 years earlier can roughly double or triple your final balance, even with a lower monthly contribution.
Inflation and real returns: a nominal return of 7% with 3% inflation yields
a real return of roughly (1.07 / 1.03) − 1 ≈ 3.88%. The
"In today's dollars" figure shows what your future balance is worth in current purchasing
power — a more honest measure of actual wealth gained.
Related Tools
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the principal), compound interest grows exponentially — the longer the time horizon, the more dramatic the effect.
How is compound interest calculated?
A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years. Example: $10,000 at 6% compounded monthly for 10 years → A = 10000 × (1 + 0.06/12)^120 ≈ $18,194.
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% annual return, money doubles in roughly 72 ÷ 6 = 12 years. At 9%, it doubles in about 8 years.
How often should interest compound for the best return?
More frequent compounding produces slightly higher returns at the same stated rate. Daily compounding yields more than monthly, which yields more than annually. The difference is small at typical savings rates — for example, 5% compounded daily vs. annually on $10,000 over 10 years is about $128 more.
What is the difference between APY and APR?
APR (Annual Percentage Rate) is the stated interest rate. APY (Annual Percentage Yield) accounts for compounding and reflects the true annual return. APY = (1 + r/n)^n − 1. A 6% APR compounded monthly has an APY of about 6.17%.