Compound Interest Calculator
Calculate the future value of any investment or savings account with compound interest. Supports multiple compounding frequencies.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only applies to the principal, compound interest grows exponentially over time — which is why it is often called the eighth wonder of the world.
How is compound interest calculated?
The formula is A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate as a decimal, n is the number of times interest compounds per year, and t is the time in years. The result A is the future value including all interest earned.
What does compounding frequency mean?
Compounding frequency is how often interest is calculated and added to your balance. Daily compounding adds interest every day, monthly adds it once a month, and annually adds it once a year. More frequent compounding means slightly more interest earned over time.
What is the difference between daily and monthly compounding?
Daily compounding calculates interest 365 times per year, while monthly compounding calculates it 12 times. Daily compounding produces a slightly higher return because interest is added to the balance more frequently, giving each addition more time to earn additional interest.
Can I use this for retirement planning?
This calculator is a useful starting point for understanding how a lump sum investment grows over time with compound interest. For full retirement planning, you would also want to factor in regular contributions, inflation, taxes, and varying rates of return — which are beyond the scope of this tool.
Does this include additional contributions?
No. This calculator assumes a single lump sum principal with no additional deposits. It shows how that initial amount grows purely through compounding. If you make regular contributions, the actual future value will be higher.