Compound Interest Calculator
Calculation Results
Total Amount
$1,647.01Compound Interest Earned
$647.01What is Compound Interest?
Compound interest is the addition of interest to the principal sum of a loan or deposit. It is essentially "interest on interest", meaning that wealth grows exponentially over time, which is the core principle behind long-term investing.
How to Use This Calculator
- Enter your initial principal amount.
- Set the expected annual interest rate.
- Choose the compounding frequency (annually, monthly, daily).
- Select the investment duration in years.
- Click Calculate to see the total maturity value and wealth gained.
Formula
A = P (1 + r/n)^(nt)
- A = Final amount
- P = Principal balance
- r = Interest rate (decimal)
- n = Number of times interest applied per time period
- t = Number of time periods elapsed
Frequently Asked Questions
How does compounding frequency affect returns?
The more frequently interest is compounded (e.g., daily vs. annually), the faster your money grows, because you earn interest on your interest sooner.