Compound Interest Calculator
$
%
years
Final Value$20,096.61
Interest Earned$10,096.61
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Compound interest is calculated as A = P × (1 + r/n)^(n×t), where P is principal, r is annual rate, n is compounding frequency per year, and t is time in years.
More frequent compounding produces slightly higher returns, but starting early is far more impactful than increasing the compounding frequency.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and accumulated interest from previous periods. Unlike simple interest, compounding causes investments to grow exponentially — often called 'interest on interest.'
How often should interest compound for the best returns?
More frequent compounding yields slightly higher returns. For a $10,000 investment at 7% for 10 years: annual compounding = $19,672; daily compounding = $20,068. Starting early matters far more than compounding frequency.
What is the Rule of 72?
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6% annual return, your investment doubles roughly every 12 years (72 ÷ 6 = 12).
What rate of return should I use?
The U.S. stock market has returned roughly 10% annually (nominal) over long periods. For diversified portfolios, 6–8% is a common planning assumption after fees. Always stress-test with lower rates.
Does inflation affect compound interest calculations?
Yes. This calculator shows nominal (before-inflation) growth. To find real purchasing-power growth, subtract the inflation rate from your expected return. If you earn 7% and inflation is 3%, your real return is approximately 4%.
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