What is compound interest?
Compound interest is interest earned on your original money and on the interest that has already been added. Over long periods this snowball effect makes savings grow much faster than simple interest, which is calculated only on the original amount.
How this calculator works
Enter your starting balance, how much you add every month, the expected annual return and the number of years. The calculator applies your chosen compounding frequency and adds each monthly contribution at the end of the month. Results are estimates: real returns vary and are never guaranteed.
The formula
For a single lump sum: A = P × (1 + r/n)nt, where P is the principal, r the annual rate, n the number of compounding periods per year and t the number of years.
Tips to grow your money
- Start early: time matters more than the amount.
- Contribute regularly, even small sums.
- Watch fees: a 1% yearly fee can remove a large share of your final result over decades.
- Rule of 72: divide 72 by the annual rate to estimate the years needed to double your money.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus previously earned interest.
Does more frequent compounding matter?
It helps slightly, but the interest rate and the time invested matter far more than the compounding frequency.
Are the results guaranteed?
No. They are mathematical projections based on a constant rate. Real investments fluctuate.