Compound Interest Calculator

What is compound interest?

Compound interest is interest calculated on both the initial principal and all the accumulated interest from previous periods. Albert Einstein supposedly called it "the eighth wonder of the world" — and for good reason. Over time, compounding can turn even modest savings into substantial wealth.

The compound interest formula

A = P × (1 + r/n)^n×t

Where A is the final amount, P the principal, r the annual interest rate (as a decimal), n the number of times interest compounds per year, and t the number of years.

Why frequency matters

The more often interest compounds, the faster your money grows. Monthly compounding outperforms annual compounding because each month's interest starts earning its own interest sooner. Use the frequency selector to compare the difference.

Realistic long-term returns

• High-yield savings / CDs: 4%–5%
• Conservative portfolio (bonds): 4%–6%
• Balanced portfolio (stocks + bonds): 6%–8%
• S&P 500 historical average: ~10% (before inflation)

Remember: past performance does not guarantee future results, and high returns come with higher risk. Always consider inflation, which historically averages 2%–3% per year.

The Rule of 72

A quick mental shortcut: divide 72 by your annual return rate to estimate how many years it takes for your money to double. At 8%, your money doubles every 9 years. At 12%, every 6 years. This calculator does the precise math for you.