Compound Interest Calculator
Anyone investing money should take advantage of the compound interest effect. The longer the period, the greater the effect. With our compound interest calculator, you can calculate how much compound interest you will earn over a specific investment period.
How to Use the Compound Interest Calculator
Using our calculator is straightforward and requires just a few inputs to generate your investment projections. Enter your starting amount, decide on regular contributions if applicable, set your investment timeframe, and specify the expected annual return rate. The calculator will instantly show you how your investment grows over time, breaking down your total contributions versus the interest earned.
After entering all values, click the calculate button to see your results displayed in both numerical format and a visual chart. The chart helps you understand how your wealth accumulates year by year, with contributions shown in green and earned interest in orange.
Understanding the Input Fields
Each input field in the calculator serves a specific purpose in determining your investment outcome. Understanding what each field represents will help you create accurate projections.
Start Capital
This is the initial amount of money you're investing at the beginning. If you're starting a new investment from scratch, this would be your first deposit. For existing investments, enter the current value of your portfolio.
The start capital forms the foundation of your investment and immediately begins earning interest. Even without additional contributions, this initial amount will grow through the power of compound interest over your investment period.
Monthly Contribution
This field represents the additional amount you plan to invest regularly each month. Monthly contributions are powerful because they allow you to take advantage of , reducing the impact of market volatility on your overall investment.
If you don't plan to make regular contributions, simply enter 0. Many investors find that consistent monthly contributions, even small amounts, significantly boost their long-term wealth accumulation compared to one-time investments alone.
Investment Period
The investment period is the length of time in years that you plan to keep your money invested. This is one of the most critical factors in compound interest calculations because interest needs time to compound and generate returns on returns.
Longer investment periods dramatically increase the compound interest effect. An investment held for 30 years will generate substantially more interest than one held for 10 years, even with the same interest rate and contributions. Consider your financial goals and timeline when selecting this value.
Yearly Interest Rate
This is the expected annual rate of return on your investment, expressed as a percentage. Different investment types historically produce different average returns. For example, stock market index funds have historically averaged around 7-10% annually, while savings accounts typically offer 1-3%.
Use realistic estimates based on your actual investment vehicle. Being too optimistic can lead to unrealistic expectations, while being too conservative might underestimate your potential growth. Research historical returns for your specific investment type to set appropriate expectations.
Compounding Frequency
determines how many times per year your interest is calculated and reinvested. The options are monthly (12 times per year), quarterly (4 times per year), or yearly (once per year).
More frequent compounding generally results in slightly higher returns because your interest starts earning its own interest sooner. The difference between monthly and yearly compounding might seem small in the short term, but it becomes more significant over longer investment periods.