Compound Interest Calculator

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It grows exponentially over time, unlike simple interest which grows linearly.

More frequent compounding yields more growth. Daily compounding earns slightly more than monthly, which earns more than annual. The difference becomes significant over long time horizons.

Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, money doubles in roughly 72 ÷ 6 = 12 years. At 9%, it doubles in about 8 years.

A = P(1 + r/n)^(nt), where P = principal, r = annual rate (decimal), n = times compounded per year, t = years. For monthly contributions, the future value of annuity formula is added on top.

Historically, broad stock market index funds have returned roughly 7–10% annually before inflation. High-yield savings accounts typically offer 4–5%. Use realistic rates to avoid overestimating future wealth.

Enormously. $5,000 invested at 7% for 40 years grows to about $74,872. The same amount for 20 years grows to only $19,348 — less than 26% as much. Starting 20 years earlier nearly quadruples the result.