Compound interest calculator
Simulate how much your money can grow over time with the power of compound interest, the "interest on interest". Enter your initial capital, monthly contribution, interest rate and time horizon.
- Total invested
- 0
- Total interest
- 0
Gross nominal simulation, for educational purposes. It does not account for tax or inflation and is not investment advice.
What is compound interest?
Compound interest is interest applied not only to the capital you invested, but also to the interest already accumulated. It is the so-called "interest on interest": each period the calculation base grows and wealth compounds exponentially, the famous snowball effect. The longer your money stays invested, the stronger that effect.
The compound interest formula
For a single lump sum the final amount is M = C x (1 + i)^n, where C is the initial capital, i the rate per period and n the number of periods. With monthly contributions you add the future value of that series: PMT x [((1 + i)^n - 1) / i]. This calculator applies both parts automatically and converts the annual rate to monthly when needed.
Why compound interest matters to investors
Over the long run the difference between simple and compound interest is enormous. Two habits amplify it: starting early (time is your main ally) and reinvesting returns instead of withdrawing them. Regular contributions, even modest ones, combined with time, build wealth steadily. Compare low-cost brokers in our broker comparison.
Frequently asked questions
What is compound interest?
Compound interest is interest earned not only on the capital you invested initially, but also on the interest already accumulated in each period. It is the famous "interest on interest": over time, the snowball effect makes your wealth grow exponentially rather than linearly.
What is the compound interest formula?
The basic formula is M = C x (1 + i)^n, where M is the final amount, C the initial capital, i the interest rate per period and n the number of periods. With monthly contributions you add the future value of a payment series: PMT x [((1 + i)^n - 1) / i].
What is the difference between simple and compound interest?
With simple interest, interest is always calculated on the initial capital. With compound interest, it is calculated on the initial capital plus the interest already accumulated. Over the long run the gap between the two is huge, which is why compound interest matters so much to investors.
How does compound interest help when investing?
The earlier you start and the longer your money stays invested, the stronger the compounding effect. Reinvesting returns (instead of withdrawing them) and contributing regularly amplify wealth growth over the years.
Does this calculator account for tax and inflation?
No. The calculator shows gross nominal growth for educational purposes. Investment returns may be taxable depending on the product, and inflation erodes purchasing power over time. Factor these in your own analysis.
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