Compound interest calculator

Interest on interest

Simple interest pays a fixed amount each year on your original deposit. Compound interest pays interest on the interest as well: each time interest is added, it joins the balance and starts earning too. Over a few months the difference is small. Over decades it is large, which is why time is the strongest factor in long-term saving and why the same rate of return can mean very different results depending on how long you leave the money alone.

What the calculator uses

• Starting amount: what you have at the beginning.
• Monthly deposit: an amount added every month, which can be zero, entered at the start or at the end of each month.
• Annual interest rate: the nominal yearly rate, before compounding.
• Frequency: how often interest is added: daily, monthly, quarterly, twice a year or yearly. More frequent compounding yields slightly more.
• Years: how long the money stays invested, up to 100.

The results

The main figure is the final balance. Beside it you see how much you put in altogether, the starting amount plus every deposit, and how much interest you earned, so you can see how much of the total is growth and how much is your own money. The effective annual rate shows what the nominal rate really yields in a year once compounding is taken into account: 5% compounded monthly is an effective 5.12%. The year-by-year table lets you follow the balance and see the point at which interest starts to outweigh the deposits.

Small changes, big differences

Try changing one input at a time. Starting five years earlier, adding a modest amount monthly, or getting half a point more of interest can change the result by more than doubling the starting amount. The calculator lets you test those scenarios in a few seconds.

What it does not do

This is a simplified model with a constant rate and regular deposits. It ignores fees, taxes on the interest, inflation, withdrawals and changes in the rate, all of which affect real results. A rate is not a guarantee, and investments can lose value. The tool is an aid to understanding, not financial advice; consult a qualified professional before making decisions with your money.