Skip to content
toolwise

Compound Interest Calculator

See how savings grow with compound interest and regular deposits.

$
$
%
yrs

Future value

–

Total deposits
–
Interest earned
–
Deposits Interest
Year-by-year breakdown Show
YearDepositsInterestBalance

Results are estimates for general information only and are not financial advice. Check important figures with a qualified professional or your lender. Read our disclaimer.

When to use it

The compound interest calculator shows how savings or investments grow over time when interest is added back to the balance. Use it to see what regular saving could become by retirement, to compare savings accounts, to decide between saving more or starting earlier, or to explain to a teenager why starting early matters so much.

How to calculate compound interest

  1. Choose your Currency.
  2. Enter the Starting amount you have now.
  3. Enter a Monthly contribution, the amount you’ll add each month (0 if none).
  4. Enter the Annual interest rate and the number of Years.
  5. Choose Compounding: Yearly, Quarterly, Monthly or Daily.
  6. Read the Future value, Total deposits and Interest earned. The bar shows how much came from deposits and how much from interest.
  7. Press Show under Year-by-year breakdown for each year’s figures.

A worked example

You have $10,000 saved and can add $200 a month. At 7% a year, compounded monthly, for 20 years, the result is $144,572.72. Only $58,000 of that is money you put in; $86,573 is interest. In the breakdown you’ll see the interest earned each year grow from about $800 in year one to over $9,600 in the final year, which is compounding at work.

What makes the biggest difference

  • Time: wait 10 years longer and the same habit often more than doubles the result, because growth builds on growth.
  • Rate: the gap between 4% and 7% looks small but can mean tens of thousands over 20 to 30 years.
  • Regular contributions: adding a little every month often matters more than a big starting amount.
  • Fees: a 1% yearly fee comes straight off the rate, so 7% becomes 6%.

Tips

  • Start with realistic rates. Savings accounts and bonds pay steadier but lower rates; shares vary year to year.
  • Test several scenarios, such as a cautious, a middle and an optimistic rate.
  • Increase contributions when your income rises, even by small amounts.
  • Think in today’s money by lowering the rate by your expected inflation.

Common mistakes

  • Treating results as guaranteed. Investment returns can fall as well as rise.
  • Entering the monthly rate instead of the annual rate. Always use the yearly figure.
  • Forgetting tax and fees, which reduce real returns.
  • Comparing accounts by rate alone when compounding and fees differ; compare the future value instead.

Plan a target amount with the Savings Goal Calculator, project retirement savings with the Retirement Calculator, or see how prices change over time with the Inflation Calculator.

Frequently asked questions

What is compound interest?

It's interest earned on both your original money and the interest it has already earned. Each period, the interest is added to the balance, so the next period's interest is a little larger. Over many years this snowball effect does most of the growth.

Does compounding monthly or daily make a big difference?

Less than people think. At 7% a year, monthly compounding earns about 7.23% in effect, and daily about 7.25%. The rate, the time and how much you add matter far more.

What interest rate should I use?

Use the rate your savings account or bond pays. For stock investments, many people test a few cautious rates, such as 4%, 6% and 8%, because returns go up and down and are never guaranteed.

Does it account for inflation or tax?

No. Results are before tax and in future money. To see what the result might be worth in today's money, subtract your expected inflation rate from the interest rate, for example 7% minus 3% gives 4%.

What is the rule of 72?

A quick estimate of how long money takes to double: divide 72 by the yearly interest rate. At 6%, money roughly doubles in 12 years; at 9%, in about 8.

Related tools