Investing
Compound Interest Calculator
Project long-term investment growth and compound returns over customizable time horizons.
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- Results update live as you type
Investment Parameters
Results update live as you type
Future Value
Projected wealth over 5 years at 6.50% annual return
- Initial Investment
- $10,000.00
- Total Contributions
- $12,000.00
- Interest earned
- $5,962.97
- Your Deposits
- $22,000.00
- Initial Investment (36%)$10,000.00
- Total Contributions (43%)$12,000.00
- Interest earned (21%)$5,962.97
Your initial $10,000.00 will grow to $27,962.97, earning $5,962.97 in compound growth.
| Metric | Current | + $50.00 / Period |
|---|---|---|
| Contribution | $200.00 | $250.00 |
| Total Contributions | $12,000.00 | $15,000.00 |
| Interest earned | $5,962.97 | $6,496.67 |
| Ending Balance | $27,962.97 | $31,496.67 |
Comparison assumes the same starting principal, interest rate, frequency, and timeline with an extra $50.00 contributed each period.
This projection assumes a fixed annual return rate and consistent periodic deposits. It does not account for investment volatility, market downturns, taxes, or management fees.
How the Calculation Works
Understand the formula and variables behind the numbers.
Compound interest creates exponential balance accumulation because returns earned in each compounding cycle are added back into the principal balance, generating further interest in all subsequent cycles. Simple Interest vs. Compound Interest.
For detailed mathematical explanations and derivations of compounding formulas, explore our guide on
- End-of-Period Deposits: Regular contributions are modeled at the conclusion of each interval (ordinary annuity), compounding in all subsequent cycles.
- Fixed Compounding Return: Projections assume a steady, uninterrupted annual yield compounded according to the selected frequency.
- Pre-Tax Growth: Estimates do not deduct capital gains taxes, income taxes on interest distributions, or fund management expense ratios.
Annual Growth Schedule
Year-by-year schedule tracking starting balance, new contributions, compound interest earned, and ending balance.
| Year | Starting Balance | Contributions | Interest Earned | Ending Balance |
|---|---|---|---|---|
| Year 1 | $10,000.00 | $2,400.00 | $742.53 | $13,142.53 |
| Year 2 | $13,142.53 | $2,400.00 | $952.99 | $16,495.51 |
| Year 3 | $16,495.51 | $2,400.00 | $1,177.54 | $20,073.05 |
| Year 4 | $20,073.05 | $2,400.00 | $1,417.14 | $23,890.19 |
| Year 5 | $23,890.19 | $2,400.00 | $1,672.78 | $27,962.97 |
Common Savings Scenarios
Benchmark comparisons showing projected savings, required deposits, and timelines across common savings goals at 6.50% annual return.
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Frequently Asked Questions
Answers to common questions about this calculator.
What is compound interest?
Compound interest is interest earned on both the original principal and on accumulated interest from previous periods. Unlike simple interest, which only applies to the principal, compounding causes your investment to grow exponentially over time as interest itself generates additional interest.
How does compound interest work?
Compound interest works by adding earned interest to the principal balance at each compounding period, so that future interest is calculated on a larger base. Over time, this creates exponential growth as interest itself earns interest.
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus accumulated interest. As a result, compound interest grows faster and yields higher returns over long periods.
How to find compound interest?
To find compound interest, use the formula A = P(1 + r/n)^(nt) where A is the future value, P is the principal, r is the annual rate, n is compounding frequency, and t is time in years. Multiply principal by the growth factor and subtract principal to isolate interest earned.
How does the age that a person starts saving impact the amount they can earn in compound interest?
The earlier a person starts saving, the more time compound interest has to accumulate. Even small early contributions can grow significantly over decades because each year’s interest compounds on a larger base, demonstrating the power of time in the market.
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