Compound Interest Calculator
Calculate how your money grows over time with compound interest and regular contributions.
Results
Final Value$0.00
Total Contributions$0.00
Total Interest Earned$0.00
How it works
This calculator uses the compound interest formula with regular contributions:
- Compound Interest: A = P(1 + r/n)^(nt)
- Future Value of Contributions: FV = PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where P is principal, r is annual rate, n is compounding frequency (monthly), and t is time in years.
Example: The Power of Compound Interest
Starting with $10,000 and adding $200/month at 7% annual return for 20 years:
- Final Value: $143,785.10
- Total Contributions: $58,000
- Interest Earned: $85,785.10
Your money nearly tripled because of compound interest!
FAQ
- What is compound interest?
- Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, your money grows exponentially because you earn "interest on interest."
- How often should interest compound?
- More frequent compounding (daily vs. annually) results in slightly higher returns. However, the difference is usually small. Most savings accounts compound daily or monthly, while many investments compound annually.
- What is a realistic rate of return?
- Historical stock market returns average 7-10% annually (before inflation). Savings accounts typically offer 0.5-5%. Bonds average 3-6%. Always consider inflation (2-3% historically) when projecting real purchasing power.