Compound Interest Calculator
Simulate investments and savings with compound interest. Find out how much your money can grow over time.
The compound interest calculator shows how an invested amount grows over time when each period's interest starts earning interest too, not just the original amount. This "interest on interest" effect is what makes long-term investing so much more powerful than it first appears: the longer money stays invested, the larger the share of the final result that comes from interest itself, rather than from your own contributions. Enter the initial amount, an optional monthly contribution, the interest rate and the term to see the final amount, how much you invested in total, and how much came from interest.
How to use
- Enter the initial amount you already have to invest (can be zero).
- If you plan to invest every month, enter the monthly contribution amount.
- Fill in the interest rate and term, choosing whether they're monthly or yearly, and watch the result update automatically.
Worked example
An investor starts with $5,000.00 and invests $500.00 a month, at 8% per year, for 15 years. By the end of the period, the accumulated amount is $184,664.00. Of that total, $95,000.00 came out of the investor's pocket ($5,000.00 upfront + $500.00 × 180 months), while $89,664.00 — more than half the final value — came purely from compound interest over time. That accumulated effect is what makes money invested early worth so much more than the same amount invested later.
Frequently asked questions
What's the difference between simple and compound interest?
With simple interest, returns are always calculated on the original amount. With compound interest, each period's return becomes part of the amount that earns interest in the next period too, leading to faster growth over time.
How is a yearly rate converted to monthly?
We use compound conversion: the equivalent monthly rate is calculated so that, applied 12 times in a row, it produces the same yearly rate you entered — not just the yearly rate divided by 12.
At what point in the month is the contribution applied?
We assume the contribution is made at the end of each month, a common model used in investment simulators.
Why does starting to invest early make such a big difference?
Because the compound interest effect is exponential, not linear: in the early years, most of the balance comes from your own contributions, but over time interest earned on previous interest makes up an ever-larger share of the total. An investor who starts 10 years earlier, even with smaller contributions, often ends up with more than someone who starts later with larger ones.
Does the calculator account for inflation or management fees?
No. The result shows the nominal growth of the invested amount, without deducting inflation, management fees, custody costs, or taxes on returns — factors that reduce real returns and vary by the type of investment chosen.
What interest rate is realistic to simulate?
It depends on the type of investment: fixed-income products tied to a benchmark rate tend to track close to the prevailing base interest rate, while stock funds and other variable-income assets have historically higher long-term returns, but with short-term swings and risk of losses.