Compound Interest Calculator

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only grows linearly, compound interest grows exponentially — your money earns interest on its interest.

For example, $10,000 earning 8% annually turns into approximately $46,610 after 20 years — without adding a single extra dollar. With monthly contributions of $500, that number jumps to over $340,000.

This calculator uses the standard compound interest formula with periodic contributions:

Where P = principal, r = annual rate, n = compounding periods per year, t = years, and PMT = periodic payment.

The more frequently interest is compounded, the more you earn. Monthly compounding produces slightly more than annual compounding because your interest starts earning its own interest sooner. However, the difference between monthly and daily compounding is minimal for most investment amounts.

• Start early: Time is the most powerful factor. Starting 10 years earlier can double your final balance.
• Be consistent: Regular monthly contributions are more impactful than sporadic large deposits.
• Reinvest dividends: Let dividends buy more shares, which generate their own dividends.
• Minimize fees: A 1% fee difference over 30 years can cost you hundreds of thousands of dollars.
• Increase contributions annually: Even a 3% annual increase in contributions can significantly boost your final balance.