Compound Interest Calculator

A compound interest calculator is a powerful financial tool designed to help you understand how your investments or savings can grow over time. It takes into account the effect of earning interest on both your initial principal and the accumulated interest from previous periods, demonstrating the potential for exponential growth.

What is Compound Interest?

Compound interest is the interest calculated on the initial principal and the accumulated interest from previous periods. This means you earn interest on interest, leading to faster growth of your money compared to simple interest, where interest is calculated only on the principal amount.

How to Use a Compound Interest Calculator

Enter your initial investment or deposit amount
Input the annual interest rate
Specify the investment time period in years
Choose the compounding frequency (e.g., annually, monthly, daily)
Add any additional contributions (optional)
Click the "Calculate" button to see the results

Features of a Compound Interest Calculator

Calculate future value of investments or savings
Account for different compounding frequencies
Include regular contributions to simulate consistent saving
Visualize growth with interactive charts
Compare different scenarios by adjusting variables
Provide breakdown of principal and interest earned
Option to account for inflation

Who Should Use This Calculator?

Investors planning for long-term financial growth
Savers setting goals for major purchases or retirement
Students learning about the power of compound interest
Financial advisors demonstrating investment potential to clients
Anyone interested in understanding how their money can grow over time

FAQ

Is this calculator free to use?

Yes, our compound interest calculator is completely free and requires no registration.

How accurate are the calculations?

Our calculator provides precise results based on the information you input. However, remember that in real-world scenarios, interest rates and contributions may vary over time.

Can I calculate the effect of inflation?

Yes, many compound interest calculators include an option to factor in an estimated inflation rate to show the real growth of your investment over time.

What's the difference between APY and APR?

APY (Annual Percentage Yield) includes the effect of compound interest, while APR (Annual Percentage Rate) does not. For accurate calculations, make sure you're using the correct rate.