Compound Interest Calculator
Calculate the final amount and total interest for compound interest investments with various compounding frequencies
Compound Interest Formula
A = P × (1 + r/n)^(n×t)- P — Principal (initial investment amount)
- r — Annual interest rate (as decimal, e.g. 5% = 0.05)
- n — Compounding frequency per year (yearly=1, semi-annually=2, quarterly=4, monthly=12)
- t — Investment period (years)
- A — Final amount (principal + interest)
Calculation Example
Given: Principal $100,000, annual rate 5%, 10 years, compounded monthly
Step 1: r/n = 0.05/12 = 0.004167, n×t = 12×10 = 120
Step 2: A = 100,000 × (1 + 0.004167)^120
Result: Final amount ≈ $164,700.95, total interest ≈ $64,700.95
How to Use
- Enter the investment principal amount
- Enter the annual interest rate (percentage)
- Enter the investment period (years) and compounding frequency
- Click the "Calculate" button to see the final amount, total interest, and ratio chart
FAQ
What is the difference between compound and simple interest?
Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus accumulated interest. Over time, compound interest yields significantly more — this is known as the "compounding effect" or "snowball effect."
Does higher compounding frequency mean more earnings?
Yes, with the same annual rate, higher compounding frequency (e.g., monthly vs yearly) results in a slightly higher final amount, because interest is added to the principal more frequently. However, the difference is usually modest.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes for an investment to double: divide 72 by the annual interest rate (%). For example, at 6% annual rate, it takes approximately 72 ÷ 6 = 12 years to double.