Compound Interest Calculator
Calculate how your investments grow over time with the power of compounding. Enter your principal, interest rate, compounding frequency, and time period to see your future balance and total interest earned.
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Disclaimer: These calculations are for informational purposes only and do not constitute financial advice. Actual returns may vary based on market conditions.
Understanding Compound Interest
Compound interest is often called the eighth wonder of the world — and for good reason. Unlike simple interest, which is calculated only on the principal, compound interest is calculated on both the principal and the accumulated interest from previous periods.
The Formula
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Compounding frequency per year
- t = Time in years
The Rule of 72
A quick way to estimate how long it takes to double your money: divide 72 by the annual interest rate. At 7% interest, your investment doubles in approximately 72 ÷ 7 ≈ 10.3 years.
Frequently Asked Questions
Simple interest is calculated only on the initial principal. Compound interest is calculated on the principal plus any previously earned interest, resulting in exponential growth over time.