Compound Interest Calculator
Calculate how your money can grow over time with compound interest. See how regular contributions and compounding frequency can significantly impact your investment growth.
Investment Parameters
Year-by-Year Breakdown
| Year | Balance | Inflation-Adjusted | Contributions | Interest Earned |
|---|
Understanding Compound Interest
What is Compound Interest?
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest allows your investment to grow at an accelerating rate because you earn "interest on interest."
The Power of Compounding
The key to maximizing compound interest is time. The longer your money remains invested, the more dramatic the compounding effect becomes. This is why starting early with investments, even with small amounts, can lead to significant wealth accumulation over decades.
Key Factors Affecting Growth
- Principal Amount: The initial amount invested
- Interest Rate: The annual rate of return
- Compounding Frequency: How often interest is calculated and added to the principal
- Time: The length of the investment period
- Regular Contributions: Additional investments made periodically
The Rule of 72
A quick way to estimate how long it will take for your investment to double is the Rule of 72. Divide 72 by your expected annual rate of return to get the approximate number of years needed to double your money. For example, at 6% return, your money will double in about 12 years (72 ÷ 6 = 12).
Your investment will double in approximately 14.4 years at 5% annual return.
Investment Summary
Final Balance
$0.00
Inflation-adjusted: $0.00
Total Principal
$0.00
Total Interest
$0.00
Interest-to-Principal
0%
Years to Double
14.4 years(Rule of 72)
Effective Annual Rate
5.00%
Actual annual rate accounting for compounding frequency