Compound Interest Calculator
Calculate compound interest daily, monthly, or annually. See how your savings, 401k, Roth IRA, or CD investment can grow over time with our free online calculator.
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Understanding Compound Interest
Compound interest is the interest earned on both the initial principal and the accumulated interest from previous periods. It's often called "interest on interest" and can significantly boost your investment returns over time.
How Compound Interest Works
When you invest money, you earn interest on your initial investment. In the next period, you earn interest not only on your original amount but also on the interest you earned. This creates a snowball effect that accelerates your wealth growth.
Key Factors Affecting Compound Interest
- Principal Amount: The initial amount you invest
- Interest Rate: The annual interest rate (APR)
- Time Period: How long you keep your money invested
- Compounding Frequency: Daily, monthly, annually, or continuously
Example Calculation
If you invest $10,000 at a 7% annual interest rate compounded monthly for 10 years, your investment would grow to approximately $20,096. The power of compound interest added $10,096 to your original investment!