💰 Compound Interest Calculator
Discover the power of compound interest. See how your money grows when your earnings generate their own earnings.
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A = P(1 + r/n)^(nt) + PMT × ((1 + r/n)^(nt) - 1) / (r/n)Understanding Compound Interest
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. It's often called "interest on interest" and is the reason why investing early is so powerful.
Simple vs Compound Interest
Simple interest is calculated only on the principal amount.Compound interest is calculated on the principal plus accumulated interest, leading to exponential growth over time.
How Compounding Frequency Affects Growth
- Annually: Interest added once per year
- Quarterly: Interest added 4 times per year
- Monthly: Interest added 12 times per year
- Daily: Interest added 365 times per year (maximum growth)
The more frequently interest compounds, the more you earn. However, the difference between monthly and daily compounding is minimal for most practical purposes.
The Rule of 72
A quick way to estimate how long it takes to double your money: divide 72 by your interest rate. For example, at 8% interest, your money doubles in approximately 72 ÷ 8 = 9 years.
Tips to Maximize Compound Growth
- Start Early: Time is the most important factor
- Contribute Regularly: Consistent additions amplify growth
- Reinvest Earnings: Don't withdraw interest
- Choose Higher Rates: Even 1% more makes a big difference over time