Compound Interest Calculator
Quick answer
Enter principal, annual rate, years, and compounding frequency. Future value rises faster than a straight line when compounding applies.
For a related estimate, see 401k Calculator.
Explore further: Future Value Calculator · Gdp Calculator
Intuition
Each period adds interest to the balance; the next period’s interest applies to a larger base — that feedback loop is compounding.
Explore further: Investment Calculator · Ira Calculator
Compound interest means earning returns on prior returns. It is the core idea behind long-term investing and debt accrual — same math, different sign.
How to use this calculator
- Match the product: Savings accounts, bonds, and portfolios compound on different schedules.
- Separate nominal and real: Subtract inflation mentally when judging purchasing power.
- Compare to simple interest: Flip modes to see how large the compounding gap becomes over time.
Real-world examples
- Example: frequency: Monthly compounding typically beats annual at the same nominal rate because more periods mean more reinvestment events.
- Sensitivity check: Nudge the rate by about +0.5% and the principal by about −5%. If the payment, break-even, or target amount moves enough to change your decision, you are still on a steep part of the curve where small inputs matter.
Explore further: Savings Rate Calculator
What this means
Small rate changes matter a lot over long horizons — sensitivity analysis beats single-point optimism.
FAQ
Are growth projections guaranteed?
No. Returns are uncertain; use ranges and stress tests rather than a single optimistic path.
Should I compare pre-tax and Roth using the same return?
You can, but spendable dollars differ at withdrawal — tax location matters for net outcomes.
How accurate is this calculator?
It applies standard math to the inputs you enter. Real lenders, payroll rules, and rounding can differ—use results for planning and comparison, not as binding quotes.