Compound Interest Calculator
See exactly how compound interest grows your money over time. Choose your compounding frequency — daily, monthly, quarterly, semi-annually, or annually — add optional monthly contributions, and get a full year-by-year breakdown.
All calculations happen in your browser. No data is stored or sent anywhere.
Calculator Inputs
Enter your principal, rate, time horizon, and optional monthly contributions.
How Compound Interest Works
Rule of 72
Divide 72 by your annual interest rate to estimate how long it takes to double your money. At 6%: 72 ÷ 6 = 12 years. At 9%: 72 ÷ 9 = 8 years. It's a handy mental check — this calculator gives the exact answer.
Formula: Years to double ≈ 72 / Rate%
Compounding Frequency Explained
Frequency determines how often interest is calculated and added to your balance. More frequent compounding gives a higher effective yield than the stated nominal rate suggests. At 6% nominal:
- Annual: 6.00% effective APY
- Monthly: 6.17% effective APY
- Daily: 6.18% effective APY
Power of Monthly Contributions
Adding even a small monthly contribution drastically increases your final balance. Consider $10,000 at 7% for 20 years:
- No contributions: ~$38,697
- $100/month: ~$64,743 (+$67%)
- $300/month: ~$116,836 (+202%)
Each dollar added early benefits from years of compounding.
Compound vs Simple Interest
Simple interest only applies to your original principal. Compound interest earns returns on previously earned interest too — creating exponential rather than linear growth.
Example — $10,000 at 6% for 20 years:
- Simple: $22,000 ($12,000 interest)
- Compound (annual): $32,071 ($22,071 interest)
- Compound (monthly): $33,102 ($23,102 interest)
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Project retirement →Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from prior periods. This causes your money to grow exponentially rather than linearly — often described as "interest on interest." The longer your time horizon, the more dramatic the compounding effect becomes.
How does compounding frequency affect my final balance?
More frequent compounding means interest is added to your balance more often, giving subsequent interest calculations a slightly larger base. Daily compounding yields more than annual compounding at the same nominal rate. The effective APY (Annual Percentage Yield) captures this difference — a 6% nominal rate compounded daily has an effective APY of approximately 6.18%.
What is the Rule of 72?
The Rule of 72 is a mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%: 72 ÷ 6 = 12 years. At 9%: 72 ÷ 9 = 8 years. It works best for rates between 5% and 12%. Use this calculator for the precise doubling time.
How do monthly contributions help?
Regular monthly contributions dramatically accelerate wealth accumulation because each deposit immediately begins earning compound interest. Even modest contributions — $100 or $200 per month — can add tens of thousands of dollars to your balance over decades because early contributions benefit from the most years of compounding.
What is the difference between compound and simple interest?
Simple interest applies only to your original principal: Interest = Principal × Rate × Time. Compound interest applies to the principal plus all previously earned interest. For $10,000 at 6% over 20 years: simple interest yields $12,000 in earnings, while compound interest (annual) yields about $22,071 — nearly double — because each year's interest itself earns interest.