How to use the Compound Interest Calculator tool
- Enter your starting amountThe money you invest or deposit today.
- Add monthly contributionsOptional: how much you plan to add every month. Enter 0 for a one-off deposit.
- Set the rate and timeEnter the yearly interest rate and the number of years.
- Choose the compoundingYearly, half-yearly, quarterly, monthly or daily, as stated by your bank or product.
What you get
- Future valueYour projected balance at the end of the period.
- Deposits vs interestHow much of the final balance you put in and how much was earned.
- Effective annual rateThe APY, which shows the real yearly growth after compounding.
- Doubling timeHow long your money takes to double, with the Rule of 72 for comparison.
- Yearly tableBalance, deposits and interest at the end of every year.
What is compound interest?
With simple interest, you earn interest only on the money you originally deposited. With compound interest, the interest you earn is added to your balance and starts earning interest itself. Over time this snowball effect makes savings grow faster and faster. It is often called “interest on interest”.
The compound interest formula
A = P × (1 + r ÷ n)n × t
- A is the final amount
- P is the initial deposit
- r is the yearly interest rate as a decimal (6% = 0.06)
- n is the number of times interest compounds per year
- t is the number of years
Example: 10,000 at 6% compounded monthly for 10 years grows to 10,000 × (1 + 0.06 ÷ 12)120 = 18,193.97. Adding 200 every month brings the total to about 50,969.84, of which 34,000 is your own deposits and 16,969.84 is interest.
Does compounding frequency matter?
More frequent compounding gives slightly higher returns, because interest starts earning interest sooner. 10,000 at 6% for 10 years becomes 17,908.48 with yearly compounding and 18,220.29 with daily compounding. The difference is real but modest; the interest rate and the time you stay invested matter far more.
The effective annual rate (also called APY or AER) shows the true yearly growth after compounding. 6% compounded monthly is an effective rate of about 6.168%. Use it to compare savings accounts that compound at different frequencies.
The Rule of 72
A quick way to estimate how long it takes for money to double: divide 72 by the yearly interest rate. At 6%, money doubles in about 72 ÷ 6 = 12 years. The calculator shows both this estimate and the exact doubling time (about 11.6 years at 6% compounded monthly).
Keep in mind
- The calculator assumes a constant interest rate. Investment returns from stocks and funds vary from year to year.
- Taxes on interest and account fees are not included.
- Inflation reduces the purchasing power of your future balance.
This tool is for educational purposes and is not financial advice. For investments made through monthly SIPs, try the SIP Calculator.