Compound Interest Calculator
Enter a principal, annual interest rate, compounding frequency, and duration to see how an investment grows. Shows final amount, total interest earned, and a year-by-year breakdown.
Why compounding frequency matters (less than you'd think)
Compound interest means you earn interest on your interest, not just your original principal — that's what makes the year-by-year breakdown curve upward instead of staying flat. Compounding more often does help, but the effect is smaller than most people expect: on $10,000 at 7% for 10 years, annual compounding grows it to $19,671.51, while daily compounding only pushes that to $20,136.18 — a difference of about $465 over an entire decade. The interest rate and the time horizon do almost all of the work; the compounding frequency is a smaller lever on top.
Worked example
$10,000 invested at 7% annually for 10 years, compounded monthly, grows to $20,096.61 — $10,096.61 of that is interest, meaning the investment roughly doubled. That "doubling" isn't a coincidence: it's close to the Rule of 72 (72 ÷ 7 ≈ 10.3 years to double at 7%), a quick mental shortcut for estimating doubling time at any rate.
Frequently asked questions
What's a realistic annual rate to use?
For a high-yield savings account, 4-5% has been typical recently. For a diversified stock market index fund over the long run, 7-10% before inflation is a commonly cited historical average — though any individual year can swing far above or below that. Use a conservative rate if you're planning around the result rather than just exploring scenarios.
Does this account for inflation?
No — this shows nominal growth only. If you want to know what your future balance is worth in today's purchasing power, subtract an estimated inflation rate (historically averaging around 2-3% in the US) from the return rate before entering it, or use the Inflation Calculator alongside this one.
What's the difference between compound and simple interest?
Simple interest only ever applies to the original principal, so growth is a straight line. Compound interest applies to principal plus all previously earned interest, so growth curves upward over time — the longer the time horizon, the bigger that gap becomes.
Does this include regular contributions, like a monthly deposit into savings?
No — this calculates growth on a single lump-sum principal only. It doesn't model adding money on a recurring schedule.