Compound Interest Calculator
Calculate how your investments grow over time with compound interest.
Understanding Compound Interest
Compound Interest Formula
A = P(1 + r/n)^(nt)
Where: A = Final amount, P = Principal, r = Annual interest rate, n = Compounding frequency, t = Time in years
What is Compound Interest?
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. It's often called "interest on interest" and is one of the most powerful concepts in finance.
Key Benefits:
- Your money grows exponentially over time
- Earlier investments have more time to compound
- Regular contributions amplify the compounding effect
- Higher compounding frequency increases returns
Factors That Affect Growth:
- Principal Amount: The initial investment amount
- Interest Rate: Higher rates lead to faster growth
- Time Period: Longer periods allow more compounding
- Compounding Frequency: More frequent compounding increases returns
- Regular Contributions: Additional investments boost growth
Investment Tips:
- Start investing as early as possible to maximize time
- Make regular contributions to boost your principal
- Choose investments with competitive interest rates
- Be patient - compound interest works best over long periods
- Consider tax-advantaged accounts for better returns
Important Notes:
- This calculator provides estimates based on consistent returns
- Actual investment returns may vary due to market conditions
- Consider inflation when evaluating long-term projections
- Consult a financial advisor for personalized investment advice