How to Calculate Compound Interest: Formula and Examples

Learn how to calculate compound interest with the formula, practical examples and an investment calculator.

Compound interest is interest on interest: your earnings each year generate new earnings. It is the key to long-term growth of savings and investments. In this guide you will see the formula and real examples.

1 The compound interest formula

The final capital with compound interest is calculated as A = P × (1 + r/n)^(n×t), also adding periodic contributions when there are any.

2 Basic example

You invest €10,000 at 5% per year for 3 years: A = 10,000 × (1.05)^3 = €11,576. You earn €1,576 in compound interest alone.

3 With monthly contributions

If you also contribute €100 each month, the result grows much faster because each contribution also generates interest from the following month.

4 Use the calculator

Enter your initial investment, monthly contribution, annual interest and years in the compound interest calculator to see the final balance and interest earned.

Try it with our free tool

Compound Interest Calculator

Use the tool

Frequently Asked Questions

What is compound interest with an example?
If you invest €1,000 at 10% per year, you have €1,100 after the first year. The second year the 10% is calculated on €1,100 (€110), not on €1,000. So it grows more each year.
What is the difference between simple and compound interest?
With simple interest you always earn on the original capital. With compound interest you also earn on accumulated interest, so growth accelerates over time.
How long does it take to double money?
Using the rule of 72: divide 72 by the interest rate. At 6% per year, about 12 years; at 8%, about 9 years.

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