Compound interest calculator
Work out what a balance becomes over time, with or without regular deposits. The chart separates what you put in from what the interest added, which is the part that makes compounding worth understanding.
Built and checked by Mubashir, who works in accounting and finance. Formula and sources shown below. Not financial advice.
Your investment
Final balance
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Total paid in
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Interest earned
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Growth multiple
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Show the working
The standard compound interest formula, with your figures substituted in:
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How to use this calculator
- Starting amount — what is in the account today. Enter zero if you are starting from nothing and relying entirely on monthly deposits.
- Annual interest rate — the yearly rate before inflation and tax. Enter 8 for 8%.
- Time period — how long the money stays invested.
- Added each month — optional. Regular deposits change the shape of the result substantially, and are usually more consequential than the rate.
- Compounding frequency — how often interest is calculated and added to the balance. Most savings accounts compound monthly or daily; bonds and fixed deposits often compound annually.
The formula
For a lump sum with no additions, the whole thing is one equation:
A = P(1 + r/n)nt
P is your starting amount, r is the annual rate as a decimal, n is how many times a year interest is compounded, and t is the number of years. When you add monthly contributions, the calculator switches to compounding each deposit separately month by month, which is both more accurate and easier to chart.
Why compounding frequency matters less than people think
Moving from annual to daily compounding at the same nominal rate sounds significant and generally is not. At 8% a year, annual compounding over twenty years turns 10,000 into roughly 46,600. Daily compounding at the same nominal rate produces about 49,500. Real, but small next to the effect of time or rate.
This matters when comparing accounts. A nominal rate compounded daily is worth slightly more than the same nominal rate compounded annually, which is why regulators in many countries require an effective annual rate to be quoted alongside it. Compare effective rates, not nominal ones.
What actually drives the result
Time is the dominant variable, and it is not close. The growth curve is exponential, so the final years contribute far more in absolute terms than the early ones. Ten thousand at 8% earns about 800 in year one and roughly 3,450 in year twenty — same rate, same money, four times the annual gain. This is the entire argument for starting early rather than saving more later.
Rate compounds against time, so small differences widen dramatically. Over thirty years, 8% against 6% is not a 33% difference in outcome. It is closer to double.
Regular contributions dominate the early years and get overtaken by growth later. Run the calculator with a monthly deposit and watch the two lines on the chart: the crossover point, where accumulated interest exceeds everything you have paid in, is the moment the account starts doing more work than you do.
What the number does not include
Two things, both material. Inflation erodes the purchasing power of the final figure — at 4% inflation, money halves in value roughly every eighteen years, so a nominal 8% return is closer to 4% in real terms. To see the inflation-adjusted result, enter your real return rather than the nominal one.
Tax is deducted from interest in most jurisdictions, often annually rather than at the end, which reduces the base that compounds. Tax-sheltered accounts exist precisely because this drag is significant over long periods.
Not financial advice. This is arithmetic on a rate you supply, not a forecast. No investment returns a fixed rate every year, and the assumption of steady growth hides the sequence risk that real portfolios face. Speak to a qualified adviser before making investment decisions.
Frequently asked questions
What is compound interest?
Interest calculated on your original amount plus all the interest already added. Because each period's interest joins the balance that earns the next period's interest, growth accelerates rather than staying flat.
How is it different from simple interest?
Simple interest is always calculated on the original amount only. Ten thousand at 8% simple interest earns 800 every year forever. With compounding, the annual gain grows each year because the balance it is calculated on grows.
Does compounding frequency make a big difference?
Less than most people expect. Going from annual to daily compounding at the same nominal rate adds a few percent to a twenty-year result. Time and rate matter far more.
What is the rule of 72?
A shortcut for how long money takes to double: divide 72 by the annual rate. At 8%, roughly nine years. It is an approximation that works well between about 6% and 10%.
Should I use my nominal or real return?
If you want to know the future purchasing power of the money, use the real return — your expected return minus expected inflation. If you want the actual future balance in currency terms, use the nominal rate.
Why does my bank quote a different figure?
Usually because they quote an effective annual rate that already accounts for compounding frequency, while you entered a nominal one. Check which rate you were given before comparing.