Compound Interest Calculator
Calculate compound interest with optional regular contributions.
About This Tool
The Compound Interest Calculator shows how an investment grows over time when interest is earned on both the principal and accumulated interest. It supports five compounding frequencies and an optional regular contribution per period.
Formula: A = P(1 + r/n)^(nt). With regular contributions C per period: total = P(1+r/n)^(nt) + C Γ [(1+r/n)^(nt) β 1] / (r/n). Daily compounding yields slightly more than monthly.
How to Use
- Enter the Principal (initial investment amount).
- Enter the Annual Interest Rate as a percentage.
- Set the Time Period in years.
- Select the Compounding Frequency and optionally enter a Regular Contribution.
- Click Calculate to see the final balance and interest earned.
Use Cases
Investors model long-term savings growth or retirement fund projections. Students visualize the power of compounding over decades. Financial planners demonstrate why starting early maximizes returns. Savers compare different compounding frequencies.
FAQ
- What is the difference between simple and compound interest? β Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus accumulated interest.
- Which compounding frequency earns the most? β Daily compounding earns slightly more than monthly, which earns more than annual β but the differences are small for typical rates.
- What does "regular contribution" mean? β An amount added each compounding period (e.g., monthly deposit). It dramatically increases the final balance over long periods.