📈 Compound Interest Calculator
See how your money grows with compound interest. Enter your principal, rate, and optional regular contributions to visualize your investment's future value.
💰 Investment Details
📊 Result
Future Value
$144,572.72
$58,000.00
$86,572.72
7.23% effective rate
$144,572.72
📋 Year-by-Year Breakdown
Understanding Compound Interest
Compound interest is often called the "eighth wonder of the world." Unlike simple interest (which only earns on the original principal), compound interest earns returns on both the principal and previously accumulated interest. This creates an exponential growth effect that becomes more powerful over longer time periods.
The Formula
FV = P × (1 + r/n)n×t + C × [((1 + r/n)n×t − 1) / (r/n)]
- P = Initial principal (starting amount)
- r = Annual interest rate (decimal)
- n = Compounding frequency per year
- t = Time in years
- C = Regular contribution per period
Key Concepts
⏰ The Power of Time
Starting early matters more than investing more later. $200/month for 30 years at 7% grows to ~$227,000. Waiting 10 years and investing $300/month for 20 years only gives ~$147,000 — despite investing the same total amount.
📊 Rule of 72
Quick doubling estimate: divide 72 by your interest rate. At 6% → ~12 years to double. At 10% → ~7.2 years. At 3% → ~24 years.
Frequently Asked Questions
What is compound interest?
Interest calculated on the initial principal and all accumulated interest from prior periods. Your money earns "interest on interest," growing exponentially over time.
How does compounding frequency affect returns?
More frequent compounding (monthly vs annually) slightly increases returns. At 5%, monthly compounding yields ~5.12% effective rate vs 5.00% annual. Daily compounding pushes it to ~5.13%.
What is the Rule of 72?
A quick estimation: divide 72 by your annual interest rate to approximate how many years it takes to double your money. E.g., 72 ÷ 8% = ~9 years.