How is it different from simple interest?

Simple interest is calculated only on the original principal (Interest = P × r × t). Compound interest reinvests each period's interest, so the balance grows at an accelerating rate. Over long horizons the gap is dramatic.

What does compounding frequency change?

It's the number of times per year interest is added to the balance. More frequent compounding produces slightly higher growth at the same nominal rate — but the marginal benefit shrinks fast as frequency increases. Monthly is meaningfully better than annual; daily is barely better than monthly.

What is continuous compounding?

The mathematical limit of compounding infinitely often, given by A = P × e^(r·t) where e ≈ 2.71828. It sets an upper bound on what any other compounding schedule can produce at the same rate.

How do I use this calculator?

Enter the principal (starting amount), the annual interest rate as a percentage, the time in years, and pick a compounding frequency. The final amount and total interest earned appear instantly.

Does this account for taxes, fees, or contributions?

No. This is a pure compound-interest projection. Real investments involve taxes, fees, inflation, and (for savings goals) periodic contributions — all of which a richer financial-planning calculator would model.

Compound Interest Calculator — Future Value & Compounding Frequency

What is compound interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is computed only on the original amount, compound interest reinvests each period's earnings — so the balance grows non-linearly over time. It is the mechanism behind why long-term savings, retirement accounts, and reinvested dividends can dramatically outpace short-term linear projections.

Compound interest formula

A = P × (1 + r/n)^n·t

Where A is the final amount, P is the principal (starting balance), r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years.

For continuous compounding (the mathematical limit as n → ∞), the formula becomes A = P × e^r·t, where e ≈ 2.71828.

Worked example

You deposit $1,000 at a 5% annual rate, compounded monthly, for 10 years:

A = 1000 × (1 + 0.05/12)^12·10 = 1000 × (1.00417)¹²⁰ ≈ $1,647.01

You earn $647.01 in interest. With continuous compounding the same scenario gives $1,648.72 — only $1.71 more, illustrating that compounding more often than monthly yields diminishing returns.

Compounding frequency

Frequency	n (periods/year)	Example: $1,000 at 5% for 10y
Annually	1	$1,628.89
Semi-annually	2	$1,638.62
Quarterly	4	$1,643.62
Monthly	12	$1,647.01
Weekly	52	$1,648.33
Daily	365	$1,648.66
Continuously	∞	$1,648.72

How to use this calculator

Enter the principal — the initial amount you're investing or saving.
Enter the annual interest rate as a percentage (e.g. enter 5 for 5%).
Enter the time horizon in years.
Pick how often interest compounds: annually, monthly, daily, or continuously.
The final amount and total interest earned appear instantly.

Limitations

No contributions. This is a pure lump-sum projection. If you add money over time, use a future-value-of-an-annuity calculator instead.
No taxes. Real interest income is usually taxed; the after-tax growth will be lower.
No inflation. The result is in nominal dollars (or your chosen currency). Real purchasing power grows more slowly.
Constant rate assumption. Bank account rates and investment returns vary; this calculator uses one fixed rate for the entire horizon.
No fees. Account fees, fund expenses, or transaction costs are not modelled.

For personal financial planning, consult a financial advisor who can build in your contribution schedule, tax situation, fees, and risk tolerance.

Sources & methodology

This calculator uses the standard compound-interest formula A = P(1 + r/n)^nt, where interest is added to the principal at each compounding period so that subsequent interest is earned on the growing balance. Figures are projections based on a fixed rate and do not account for tax, fees, or inflation.

U.S. Securities and Exchange Commission, Compound Interest Calculator (Investor.gov) — the same formula and definitions, from a public financial regulator.

This is general information, not financial advice. Actual returns vary; consult a licensed financial professional for decisions.

Compound Interest Calculator

FAQs