Compound Interest Calculator

Discover the power of compound interest and see how your investments can grow over time. Calculate returns with different contribution frequencies, compounding periods, and currencies.

Investment GrowthMultiple CurrenciesFlexible ContributionsDetailed Analysis
Compound Interest Calculator
Calculate the power of compound interest and see how your investments can grow over time
Initial Investment
Your starting investment amount and currency
Regular Contributions
Additional investments made regularly over time
Preview
$100.00 monthly
$1,200.00 per year
Interest & Time
Interest rate, compounding frequency, and investment period

Understanding Compound Interest

Learn how compound interest works and why it's called the "eighth wonder of the world"

Exponential Growth

Compound interest allows your money to grow exponentially as you earn interest on both your principal and previously earned interest.

Time is Key

The longer your money is invested, the more powerful compound interest becomes. Starting early makes a huge difference in your final returns.

Regular Contributions

Adding regular contributions to your investment amplifies the compound effect and accelerates your wealth building.

Compounding Frequency

More frequent compounding (daily vs. annually) can increase your returns, though the effect diminishes with higher frequencies.

Interest Rate Impact

Even small differences in interest rates can lead to significant differences in final amounts over long periods due to compounding.

Portfolio Diversification

Use compound interest calculations to plan diversified investment portfolios across different asset classes and time horizons.

How to Use the Compound Interest Calculator

Master investment planning with our comprehensive guide

Basic Investment Calculation

To calculate compound interest for a one-time investment:

  1. Select your preferred currency from the dropdown
  2. Enter your initial investment amount
  3. Set regular contribution to $0 if it's a one-time investment
  4. Enter the annual interest rate (as a percentage)
  5. Choose how often interest compounds (daily, monthly, annually, etc.)
  6. Set your investment time period in years
  7. View results in the Calculator tab

Regular Contribution Planning

To plan investments with regular contributions:

  1. Enter your initial investment amount
  2. Set your regular contribution amount
  3. Choose contribution frequency (monthly, quarterly, annually)
  4. Ensure the contribution frequency matches your savings plan
  5. Set realistic interest rates based on your investment type
  6. Review the year-by-year breakdown in the Breakdown tab

Tip: Monthly contributions often provide better results than annual contributions due to more frequent compounding.

Analyzing Investment Growth

To understand your investment's performance:

  1. Check the Growth Chart tab to visualize your investment growth
  2. Review the year-by-year breakdown to see annual progress
  3. Compare total contributions vs. interest earned
  4. Analyze the return on investment percentage
  5. Use different scenarios to optimize your investment strategy

Retirement Planning Example

Example: Planning for retirement at age 65

  • Age 25: Start with $5,000 initial investment
  • Monthly contribution: $500 per month
  • Expected return: 7% annually (historical stock market average)
  • Time period: 40 years (age 25 to 65)
  • Compounding: Monthly
  • Result: Over $1.3 million at retirement!

Frequently Asked Questions

Common questions about compound interest and investing

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 is calculated only on the principal amount, compound interest allows your money to grow exponentially over time. Albert Einstein allegedly called it "the eighth wonder of the world" because of its powerful wealth-building potential.

How does compounding frequency affect my returns?

More frequent compounding generally leads to higher returns, but the effect diminishes as frequency increases. For example, the difference between daily and monthly compounding is usually small, while the difference between annual and monthly compounding can be more significant. The formula shows that daily compounding will always yield slightly more than annual compounding, but the practical difference may be minimal for typical investment amounts.

What's a realistic interest rate for investments?

Interest rates vary significantly by investment type. Savings accounts typically offer 0.5-2%, government bonds 2-4%, corporate bonds 3-6%, and stock market investments have historically averaged 7-10% annually over long periods. However, past performance doesn't guarantee future results, and higher returns usually come with higher risk. It's important to choose rates that match your investment strategy and risk tolerance.

Should I prioritize initial investment or regular contributions?

Both are important, but regular contributions often have a greater impact on long-term wealth building. While a larger initial investment benefits from more time to compound, consistent monthly contributions provide dollar-cost averaging benefits and ensure steady portfolio growth. The key is to start as early as possible with whatever amount you can afford, then increase contributions over time as your income grows.

How accurate are these calculations?

Our calculator provides mathematically accurate results based on the compound interest formula. However, real-world investments involve variables not captured in this calculator, such as market volatility, fees, taxes, and changing interest rates. Use these calculations as a planning tool and baseline estimate, but consult with financial advisors for comprehensive investment planning and consider factors like inflation, taxes, and investment fees in your actual strategy.