Compound Interest 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.

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

Compound interest works the same way worldwide: your money grows exponentially over time. The earlier you start investing, the more time compound growth has to work. Tax-advantaged accounts (retirement plans, ISAs, TFSAs, superannuation) can significantly boost your effective returns by reducing or eliminating tax on investment growth.

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.