Compound Interest Calculator
See how your money grows with the power of compounding.
The Magic of Compound Interest
Albert Einstein famously called compound interest the "eighth wonder of the world." Unlike simple interest, where you earn money only on your initial principal, compound interest allows you to earn "interest on interest."
Formula Used
The standard formula for compound interest is:
A = P (1 + r/n)nt
- A: Future Value (Total Amount)
- P: Principal Investment
- r: Annual Interest Rate (decimal)
- n: Number of times interest is compounded per year
- t: Time in years
Frequently Asked Questions
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal PLUS the interest accumulated over previous periods. This makes your money grow much faster over time.
The more frequent the compounding (e.g., Monthly vs. Yearly), the higher the returns, because interest gets added to your principal more often.