Compound Interest Calculator
See how your investments grow over time with the power of compound interest.
Compound Interest Calculator
See how your investments grow over time
S&P 500 historical average: ~10%
Future Value
$106,639
After 10 years at 7.0% annual return
Total Contributions
$70,000
principal + deposits
Total Interest
+$36,639
compound growth
Effective Rate
7.23%
annual yield
Monthly Contribution
$6,000
per year
Growth Timeline
How to Use This Calculator
Enter your initial investment - the lump sum you're starting with. This could be savings, an inheritance, or any amount you want to invest.
Specify monthly contributions to see how regular investing accelerates your growth. Even small amounts add up significantly over time.
Set the interest rate based on your expected returns. The S&P 500 has historically returned about 10% annually, but past performance doesn't guarantee future results.
Choose your compound frequency - how often interest is calculated and added to your principal. Monthly is typical for most investments.
Understanding Your Results
Future value shows what your investment will be worth at the end of your investment period. This includes all contributions and earned interest.
Total interest is the money you earned from compounding alone. This is essentially "free money" generated by your investment.
The growth chart shows how contributions (your money) and interest (earned money) grow over time. Notice how interest becomes a larger portion in later years - that's compound interest at work.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It's essentially 'interest on interest' and causes wealth to grow exponentially over time.
What is the compound interest formula?
The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is principal, r is annual interest rate, n is compounds per year, and t is time in years. With regular contributions, the formula becomes more complex.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your interest rate percentage. At 8% annual return, money doubles in approximately 9 years (72/8=9).
How often should interest compound?
More frequent compounding produces higher returns. Daily compounding beats monthly, which beats annually. However, the difference is usually small for typical savings rates. Focus on getting the best rate rather than compound frequency.
How much will $10,000 grow in 10 years?
At 7% annual return compounded monthly, $10,000 grows to about $20,097 in 10 years - more than doubling. At 10%, it reaches $27,070. Add $200/month contributions and that same $10,000 at 7% becomes $54,440 after 10 years.
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest. Example: $1,000 at 10% simple interest earns $100/year forever. With compound interest, year 2 earns $110, year 3 earns $121, and so on.
How do I calculate compound interest in Excel?
Use the FV (Future Value) function: =FV(rate/periods, periods*years, -payment, -principal). For example, =FV(0.07/12, 12*10, -200, -10000) calculates $10,000 initial + $200/month at 7% for 10 years. The result is $54,440.
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