Compound Interest Calculator
Future Value
$0
Total Interest: $-1,000
What is Compound Interest?
Compound Interest is the interest calculated on the initial principal amount plus all accumulated interest from previous periods. It's often called "interest on interest" and is one of the most powerful concepts in finance, allowing your money to grow exponentially over time.
Unlike simple interest (which only calculates interest on the principal), compound interest:
- Accumulates Interest: Earns interest on both your principal and previously earned interest
- Exponential Growth: Your investment grows faster over time due to compounding
- Time-Dependent: The longer your investment period, the more significant the compounding effect
- Frequency Matters: More frequent compounding (monthly vs. annually) increases returns
Compound interest is the foundation of long-term investing, retirement savings, and wealth building. It demonstrates why starting to invest early is so powerful - even small amounts can grow substantially over decades thanks to compounding. This calculator helps you visualize how your investments can grow over time.
Frequently Asked Questions
This calculator compounds interest monthly (12 times per year), which is standard for most savings accounts and investments.
Simple interest only calculates on the principal. Compound interest calculates on principal plus all previously earned interest, leading to exponential growth.
This provides estimates for fixed-rate investments. Actual returns may vary based on market conditions, fees, and investment type.