Compound Interest Calculator

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This "interest on interest" effect can significantly increase your investment over time.

The Power of Compounding

The more frequently interest compounds, the faster your money grows. For example, $10,000 invested at 7% annually for 30 years grows to $76,123 with yearly compounding, but $81,645 with daily compounding - a difference of over $5,000.

Understanding the Formula

The compound interest formula is: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the compounding frequency, and t is the time in years. The rate you enter is treated as a nominal annual rate (APR); the result also shows the effective annual yield (APY), which is what that rate works out to once compounding is included. If a bank quotes you an APY, enter it with yearly compounding.

Contributions, Fees and Inflation

Regular contributions are added on the schedule you pick, at the start or the end of each period. When the contribution schedule differs from the compounding schedule, each contribution period earns the equivalent rate (1 + r/n)^(n/m) - 1, where m is the number of contributions a year, so the starting amount grows exactly as in the formula above and the APY stays the same. The annual increase raises the contribution once a year, from the second year on.

Fees are charged as a percentage of the balance each year, split evenly over the contribution periods (a 1% fee takes about 0.083% of the balance each month). The results keep your own money (the starting amount and contributions) separate from the growth it earned and the fees it paid.

"Today's dollars" divides each future balance by (1 + inflation)^years, using the inflation rate you enter. It shows roughly what the balance would buy at today's prices; the nominal balance is what an account statement would show. For reference, the US CPI-U rose 3.7% in the 12 months to September 2026 (Bureau of Labor Statistics); long-run averages have been lower.

The goal solver works in nominal dollars. "Contribution needed" finds the regular contribution (with your increase, timing and fees) that reaches the target in the number of years entered. "Time to reach" keeps your contribution and counts the contribution periods until the balance first reaches the target, up to 100 years.

These are projections at a constant rate. Real investments rise and fall, and taxes are not included.