Calculate compound interest on savings and investments
Compound interest is interest calculated on the initial principal and accumulated interest from previous periods. Unlike simple interest, compound interest grows exponentially because you earn interest on both your original investment and previously earned interest.
Compounding frequency affects how often interest is calculated and added. Annual compounding calculates once per year, monthly calculates 12 times per year, and daily calculates 365 times per year. More frequent compounding results in higher returns due to interest being calculated on accumulated interest more often.
Monthly contributions significantly boost your investment growth. Each contribution compounds over time, creating a snowball effect. The earlier you start contributing, the more time your money has to compound, resulting in substantially higher returns.
The basic compound interest formula is A = P(1 + r/n)^(nt), where A is the future value, P is principal, r is annual interest rate, n is compounding frequency per year, and t is time in years. With monthly contributions, the formula becomes more complex to account for regular deposits.
This calculator provides estimates based on standard compound interest formulas. Actual returns may vary based on market conditions, fees, taxes, and other factors. For investment planning, consult with a financial advisor and consider all costs and risks.