Compound Interest Calculator
Calculate compound interest on your savings and investments with monthly contributions and an annual breakdown.
Compound interest calculator
Compound interest is the earnings generated not only on your initial investment but also on the accumulated interest from previous periods. It is one of the most powerful forces of long-term saving: the longer you keep the investment, the greater the effect.
The compound interest formula
A = P × (1 + r/n)^(n×t) + PMT × [((1 + r/n)^(n×t) - 1) / (r/n)]
Where P is the principal, r the annual rate, n the compounding frequency per year, t the years and PMT the periodic contribution. This calculator does the math automatically.
Simple vs compound interest
With simple interest you earn the same amount each year on the original capital. With compound interest, each year you earn a little more because the previous year's interest also generates returns. Over 20 years, the difference can be enormous.
Tips
- Start as early as possible: time is the most important factor in compound interest.
- Contribute periodically even if small: it increases the snowball effect.
- Compare rates: a 1% annual difference can mean thousands over the long term.