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Compound Interest Calculator

Updated January 2026

A compound interest calculator reveals the true power of exponential growth. See how your initial deposit and regular contributions can grow over time with daily, monthly, quarterly, or annual compounding.

How to Use This Calculator

Enter your initial deposit (the starting amount), how much you plan to contribute each month, the expected annual interest rate, and the number of years you'll invest. Select how often interest compounds — daily, monthly, quarterly, or annually. Click Calculate to see the future value of your investment, how much you contributed in total, and how much of the growth came from compound earnings.

How It's Calculated

The future value with compound interest and regular contributions uses the formula:

FV = P × (1 + r/n)^(n×t) + PMT × [ ((1 + r/n)^(n×t) − 1) / (r/n) ]

Where P is the initial principal, r is the annual interest rate (as a decimal), n is the compounding frequency per year, t is the time in years, and PMT is the total annual contribution. The first term handles growth of the lump sum while the second term handles growth of recurring contributions.

Frequently Asked Questions

Simple interest is calculated only on the original principal — you earn the same amount each period. Compound interest earns interest on both the principal and the accumulated interest from previous periods. This "interest on interest" effect creates exponential growth over time. For example, $10,000 invested at 8% simple interest earns $800 per year. With annual compounding, the same investment earns $800 the first year but $864 the second year, and grows to $46,610 after 20 years versus just $26,000 with simple interest.
More frequent compounding produces higher returns because interest starts earning interest sooner. Daily compounding yields the highest return, followed by monthly, quarterly, and annually. However, the difference diminishes as frequency increases — daily versus monthly compounding is a small gap, while monthly versus annual is significant. For long-term investments, the compounding frequency matters less than the rate of return and the time horizon.
Compounding frequency determines how often interest is calculated and added to your principal. With annual compounding, interest is added once per year. With monthly compounding, it's added 12 times per year, so each month's interest starts earning its own interest sooner. The formula FV = P × (1 + r/n)^(n×t) captures this — as n increases, the future value grows, approaching continuous compounding as n approaches infinity.

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