Compound Interest Calculator
See how savings and investments grow with compounding over time.
Quick answer
Compound interest grows a balance by future value = principal × (1 + rate ÷ n)^(n × years), where n is how many times per year interest compounds. Because each period earns interest on prior interest, the balance grows faster the more frequently it compounds and the longer it runs.
Balance after 20 years
$144,573
≈ $80,046 in today's dollars
Total contributed
$58,000
Interest earned
$86,573
Growth multiple
2.5×
How compound interest works
Compounding means you earn interest on your interest. A lump sum P at nominal annual rate r, compounded n times a year for t years, grows to:
A = P × (1 + r/n)nt
Monthly contributions each start their own compounding clock, which is why starting early beats contributing more later: in the chart above, the amber region — money the market added — eventually outgrows the emerald region you contributed.
Assumptions to keep in mind
The projection assumes a constant return and steady contributions. Real investment returns vary year to year, and inflation reduces future purchasing power — a common planning habit is to use a real (inflation-adjusted) return of 4–5% instead of a nominal 7–10%. This is an educational model, not investment advice.
Frequently asked questions
- How does the Compound Interest Calculator work?
- Compound interest grows a balance by future value = principal × (1 + rate ÷ n)^(n × years), where n is how many times per year interest compounds. Because each period earns interest on prior interest, the balance grows faster the more frequently it compounds and the longer it runs.
- Is the Compound Interest Calculator free to use?
- Yes. The Compound Interest Calculator is completely free, runs entirely in your browser, and requires no account or sign-up. Your inputs never leave your device.
Sources & methodology
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