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Compound Interest Calculator
Calculate compound interest on savings or investments. Enter your principal, interest rate, compounding frequency, and time period to see total growth, interest earned, and a year-by-year breakdown.
$
% / year
years
$/ mo
Final balance
$19,671.51
Total contributed
$10,000.00
Total interest
$9,671.51
Contributions vs. Interest
Principal & contributions (50.8%)Interest earned (96.7% return)
How to use the Compound Interest Calculator
Enter your starting amount
Type your initial investment or deposit — this is the principal that begins earning interest on day one.
Set the interest rate and time
Enter the annual interest rate (e.g. 7% for a stock market index fund) and the number of years you plan to invest.
Choose how often it compounds
Monthly compounding is the most common for savings accounts. More frequent compounding yields a slightly higher result.
Add regular contributions (optional)
Enter a monthly top-up amount to see how regular saving dramatically accelerates growth. The year-by-year table shows exactly how your balance builds.
About this Compound Interest Calculator
Albert Einstein is often (apocryphally) quoted as calling compound interest the 'eighth wonder of the world'. While he probably never said it, the sentiment is mathematically sound: money growing on top of previously earned interest can turn modest, regular savings into substantial wealth over decades. The formula is A = P × (1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the number of compounding periods per year, and t is the time in years. The power of compounding is in the exponent — time is the dominant variable. Starting 10 years earlier can double or triple your final balance, even with the same contributions. A key insight the calculator reveals is the difference between total contributions and total interest. At a 7% annual return over 30 years, most of your final balance will be interest — not money you deposited. This is why long-term investors talk about 'letting money work for you'. Compounding frequency matters but less than people think. The difference between monthly and daily compounding at 7% over 10 years on £10,000 is less than £30. Choosing the right interest rate (realistic returns for your asset class) and starting early have far more impact. Note: This calculator models compound growth mathematically. Actual investment returns vary and are not guaranteed. For personalised financial advice, consult a qualified financial adviser.
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the principal), compound interest grows exponentially — you earn interest on your interest. It's the reason long-term investing and early saving are so powerful.
The formula is: A = P × (1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the number of times interest compounds per year, and t is the time in years. For example, £1,000 at 5% compounded annually for 10 years: A = 1000 × (1.05)^10 = £1,628.89.
Common compounding frequencies are: annually (once a year), quarterly (four times a year), monthly (12 times a year), and daily (365 times a year). More frequent compounding produces slightly higher returns. Most savings accounts compound monthly or daily.
The Rule of 72 is a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes for an investment to double. For example, at 6% interest: 72 ÷ 6 = 12 years to double. It's an approximation but is remarkably accurate for rates between 2% and 20%.
APR (Annual Percentage Rate) is used for loans and shows the annual cost of borrowing including fees. AER (Annual Equivalent Rate) is used for savings accounts and shows the effective annual rate accounting for compounding. AER is always the right figure to compare when choosing savings accounts.