Compound Interest Calculator
See how your investments grow with the power of compounding.
Updated
The Power of Compound Interest
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Albert Einstein reportedly called it "the eighth wonder of the world."
The key factors are: starting amount, interest rate, time horizon, and contribution frequency. Starting early, even with small amounts, can dramatically increase your final balance due to exponential growth.
Frequently Asked Questions
What is compound interest?
Interest calculated on both the original principal and previously earned interest — so growth accelerates over time. It is the engine behind long-term investing.
What is the Rule of 72?
A quick estimate of doubling time: divide 72 by the annual return. At 6% per year, money doubles in roughly 72 ÷ 6 = 12 years.
How does compounding frequency affect growth?
More frequent compounding (monthly vs annually) yields slightly more, because interest starts earning interest sooner. The effect is modest at typical rates but grows with higher rates and longer horizons.
What is the difference between simple and compound interest?
Simple interest is earned only on the principal, so growth is linear. Compound interest is earned on principal plus accumulated interest, so growth is exponential.