Compound interest is often called the eighth wonder of the world, and once you see what it does to money over decades, you understand why. Unlike simple interest, which only earns on your original deposit, compound interest earns interest on your interest. The longer you let it run, the more dramatically your money grows — turning small, regular savings into substantial wealth.

Our compound interest calculator shows you exactly how much your principal will grow over any time period at any interest rate, with any compounding frequency from daily to annually. Whether you are planning a savings goal, comparing investment options, or just curious how much your money could grow, this tool gives you instant, accurate projections using the standard compound interest formula.

How compound interest works

The compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the starting principal, r is the annual interest rate as a decimal, n is the number of times interest compounds per year, and t is the time in years. The more frequently interest compounds, the more you earn — though the difference between monthly and daily compounding is usually small.

Here is the magic: each compounding period, your interest is added to the principal, and the next period earns interest on the new larger total. After many cycles, the growth becomes exponential. $10,000 invested at 7% annually grows to $19,672 in 10 years, $38,697 in 20 years, $76,123 in 30 years, and $149,745 in 40 years. The last decade alone earns you more than the entire first 20 years combined.

This is why financial advisors emphasize starting early. A 25-year-old who saves $5,000 per year until age 65 (40 years) at 7% return will end up with around $1.07 million. A 35-year-old saving the same $5,000 per year until 65 (30 years) ends up with only $505,000 — less than half — even though they only saved 10 fewer years.

Compounding frequency and the Rule of 72

Most savings accounts compound daily or monthly, while investment accounts often compound annually based on actual returns. Daily compounding earns slightly more than monthly, which earns slightly more than quarterly. The differences are real but small — at 5% annual rate, $10,000 grows to $16,470 in 10 years compounded annually versus $16,486 compounded daily.

A handy mental shortcut is the Rule of 72: divide 72 by your annual return percentage to estimate how long it takes for money to double. At 6% return, money doubles in roughly 12 years (72÷6). At 9% it doubles in 8 years. At 12% it doubles in just 6 years. This rule lets you quickly compare long-term outcomes without a calculator.

Compound interest vs simple interest

Simple interest is calculated only on the original principal: I = P × r × t. It does not earn interest on previously earned interest. Most car loans, mortgages, and short-term loans use simple interest from the borrower's perspective, while savings accounts, CDs, and most investments use compound interest in your favor.

Over short periods or with low rates, the two methods give similar results. Over long periods or higher rates, compound interest pulls dramatically ahead. $10,000 at 8% simple interest for 30 years grows to $34,000 (gaining $24,000). The same $10,000 at 8% compound interest grows to $100,627 — almost three times more.

How to use this calculator

1. Enter your starting principal (the amount you are depositing or investing).
2. Enter the annual interest rate as a percentage (e.g., 5 for 5%).
3. Enter the number of years you will keep the money invested.
4. Choose how often the interest compounds — daily, monthly, quarterly, or annually.
5. Click Calculate to see your final balance, total interest earned, and estimated monthly interest.

Frequently asked questions