Compound Interest Calculator
Compound Interest Calculator
Calculate how your savings grow over time with compound interest. Enter your principal, annual interest rate, investment period, and how often interest compounds. See the final balance, total interest earned, and the effective annual rate.
Formula Used
A = P(1 + r/n)^(nt) where A = final amount, P = principal, r = annual rate, n = compounds per year, t = years. Effective annual rate = (1 + r/n)^n - 1.
About This Calculator
What It Does
Calculate how your money grows with compound interest. Enter the starting amount, annual interest rate, time horizon, and compounding frequency. See the final balance, total interest earned, and effective annual rate (EAR). This is not a forecast — it shows the mathematical result at a fixed rate.
Worked Example
Investing $10,000 at 5% annual interest for 10 years, compounded monthly: final balance = $16,470.09. Total interest earned = $6,470.09. Effective annual rate = 5.12% (slightly above the nominal 5% due to monthly compounding). Compounding annually instead: $16,288.95 — the extra $181 from monthly compounding shows the power of frequency.
Real-World Usage
Retirement planning: estimate how a 401(k) or IRA grows over decades. Education savings: project a 529 plan balance. Compare savings accounts: daily vs monthly compounding matters. Early investors benefit most — $10,000 invested at 25 grows to over $100,000 by 65 at 6% monthly compounding. The calculator shows the time value of money and why starting early beats investing more later.
Local Context
Australia's Superannuation system requires employers to contribute 11% of salary. You can add voluntary contributions up to $27,500 total per year concessional cap. First home savers accounts and managed funds are common. The ASX 200 and international shares are typical investment options. Earnings within super are taxed at just 15%.
Last reviewed: May 2026.
This is a mathematical projection only. Actual investment returns vary and are never guaranteed. Past performance does not predict future results.
Frequently Asked Questions
What is compound interest?
Compound interest means you earn interest on both your original principal AND the interest you've already earned. Over time, this creates exponential growth — your money grows faster than simple interest.
How does compounding frequency affect growth?
More frequent compounding yields higher returns. Daily compounding earns slightly more than monthly, which earns more than annual. The difference grows larger with higher rates and longer time periods.
What's a good rate of return to expect?
Historical stock market returns average 7-10% annually (before inflation). High-yield savings accounts offer 3-5%. Bonds typically yield 2-5%. Your actual returns depend on your investment choices and market conditions.