Compound Interest Calculator
Calculate how your investments grow with compound interest over time.
Compound Interest Calculator
Result
Yearly Details
| Year | Invested | Accumulated Interest | Total |
|---|---|---|---|
| 1 | $10,000,000 | +$500,000 | $10,500,000 |
| 2 | $10,000,000 | +$1,025,000 | $11,025,000 |
| 3 | $10,000,000 | +$1,576,250 | $11,576,250 |
| 4 | $10,000,000 | +$2,155,063 | $12,155,063 |
| 5 | $10,000,000 | +$2,762,816 | $12,762,816 |
| 6 | $10,000,000 | +$3,400,956 | $13,400,956 |
| 7 | $10,000,000 | +$4,071,004 | $14,071,004 |
| 8 | $10,000,000 | +$4,774,554 | $14,774,554 |
| 9 | $10,000,000 | +$5,513,282 | $15,513,282 |
| 10 | $10,000,000 | +$6,288,946 | $16,288,946 |
The Power of Compound Interest
- Compound interest means "interest on interest" - great for long-term investing
- The longer the investment period, the greater the compound effect
- Adding monthly deposits can help build larger wealth
- This is a simple calculation without considering taxes
Other Calculators
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest allows your money to grow exponentially over time.
Compound Interest Formula
A = P(1 + r/n)^(nt)- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Number of times interest is compounded per year
- t = Number of years
The Power of Compound Interest
Albert Einstein reportedly called compound interest "the eighth wonder of the world." The longer you invest, the more dramatic the compounding effect becomes. For example, $10,000 invested at 7% annual return:
| Years | Simple Interest | Compound Interest |
|---|---|---|
| 10 | $17,000 | $19,672 |
| 20 | $24,000 | $38,697 |
| 30 | $31,000 | $76,123 |
Tips for Maximizing Compound Interest
- Start early: Time is the most powerful factor in compounding
- Be consistent: Regular contributions amplify the effect
- Reinvest dividends: Let your earnings compound
- Choose higher frequency: More frequent compounding means faster growth
FAQ
Q. What's the difference between simple and compound interest?
Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus accumulated interest. Over time, compound interest results in significantly higher returns.
Q. How often should interest compound?
More frequent compounding (daily or monthly) results in higher returns than annual compounding. However, the difference becomes smaller at higher frequencies. Daily compounding provides only slightly more than monthly.
