Compound Interest Calculator

About Compound Interest

Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. This powerful concept allows your investments to grow exponentially over time as your earnings generate additional earnings.

How to Use This Calculator

1. Enter your Initial Investment (the principal amount you're starting with)
2. Specify any Additional Contributions you plan to make regularly (optional)
3. Select your Contribution Frequency (monthly, quarterly, or annually)
4. Choose your preferred Currency for display purposes
5. Enter the Annual Interest Rate as a percentage
6. Select the Compound Frequency (how often interest is calculated and added)
7. Specify the Investment Period in years
8. Optionally include Tax Impact to see after-tax returns
9. Click the Calculate button to see your results

Understanding the Results

• Initial Investment: Your starting principal amount
• Total Contributions: The sum of all additional contributions made over time
• Total Interest Earned: The amount earned through compound interest
• Future Value: The total value of your investment at the end of the period
• Investment Breakdown: Visual representation of how much of your final balance comes from principal, contributions, and interest
• Investment Growth Table: Year-by-year breakdown of your investment growth

Compound Interest Formula

The basic compound interest formula used in this calculator is:

A = P(1 + r/n)^(nt)

Where:
A = Final amount
P = Principal (initial investment)
r = Annual interest rate (decimal)
n = Number of times interest is compounded per year
t = Time in years

For investments with regular contributions, a more complex calculation is used that accounts for the timing and frequency of those contributions.

Investment Tips

• Start early: Due to compound interest, investing earlier can significantly increase your returns
• Regular contributions: Making consistent contributions can dramatically boost your investment growth
• Reinvest dividends: Consider reinvesting any dividends or earnings to maximize compound growth
• Consider inflation: Remember that inflation will affect the purchasing power of your future returns
• Diversify: Spreading investments across different assets can help manage risk