Compound Interest Calculator
Calculate investment growth with compounding. See how your money multiplies over time with different interest rates and deposit schedules.
Enter your investment details above and click "Calculate Growth".
Investment Questions
Simple interest calculates interest only on your principal. Compound interest calculates interest on both principal AND previously earned interest. Example: $1,000 at 5% simple interest earns $50/year. At compound interest (compounded quarterly), year 1 earns $51.14 due to quarterly payouts. Over 20 years, compound interest creates significantly higher returns—the "8th wonder of the world."
More frequent compounding = higher returns. Daily compounding earns more than annual compounding. Example: $10,000 at 4% for 10 years: Annual = $14,802, Quarterly = $14,845, Monthly = $14,859, Daily = $14,867. The difference grows larger with higher rates and longer timeframes. Most savings accounts compound daily; bonds often compound semi-annually.
The Rule of 72 estimates how long your money takes to double: Divide 72 by your annual return rate. At 6% annual return: 72÷6=12 years to double. At 10%: 72÷10=7.2 years. This rough estimate works well for rates between 1-10%. It shows why higher returns matter—a 10% return doubles your money 5x faster than a 2% return.
Higher returns come from riskier investments. Savings accounts = 4-5% (safe). Bonds = 4-6% (low risk). Dividend stocks = 8-10% average (medium risk). Growth stocks = 10-15% average (high risk). Real estate = 8-12% (medium risk + leverage). The key: higher risk = higher potential returns, but also higher loss risk. Diversify across multiple investments to balance risk.
YES. Reinvesting interest and dividends dramatically accelerates compound growth. If you withdraw $1,000 in interest each year, you lose compound growth on that $1,000. If you reinvest it, it earns interest too—creating exponential growth. Over 30 years, the difference between reinvesting and withdrawing can be $500K+ on a $10K investment.
The best strategy: Start early, invest consistently (monthly deposits), reinvest returns, diversify across asset classes, and hold long-term. A 25-year-old investing $500/month at 8% returns has $1M+ by 65. A 45-year-old needs $2,500+/month. Time is your biggest advantage. Avoid timing the market; instead, buy regularly regardless of market conditions (dollar-cost averaging).