Compound Interest Calculator
Calculate how your initial investment grows over time with the power of compounding interest.
Total Future Value
$40,387.39
Total Interest Earned
$30,387.39
What is Compound Interest?
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Think of it as "interest on interest," which will make a sum grow at a faster rate than simple interest.
The rate at which compound interest accrues depends on the frequency of compounding, such that the higher the number of compounding periods, the greater the compound interest.
The Compound Interest Formula
To calculate compound interest manually, use the following formula:
A = P(1 + r/n)^(nt)
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit)
- r = the annual interest rate (decimal)
- n = the number of times that interest is compounded per unit t
- t = the time the money is invested or borrowed for
Compounding Frequency Comparison
| Frequency | Compounding Periods | Impact on Growth |
|---|---|---|
| Annually | 1 per year | Standard growth |
| Quarterly | 4 per year | Increased growth |
| Monthly | 12 per year | Higher growth |
| Daily | 365 per year | Maximum standard growth |