Results are illustrative only and are not financial advice. This calculator provides estimates for educational purposes only. Past performance does not guarantee future results.
Results
Total deposited
$17,000
Interest earned
$2,688.09
Return
+15.8%
APY
4.59%
Growth over time
Year-by-year balance projection including deposits and compounded interest.
At 4.5%: money doubles in ~16 years. Estimate doubling time.
Simple vs compound
How much compounding adds over simple interest.
Compound
$19,688.09
Simple interest
$19,475.00
Advantage
$213.09
Growth breakdown
Year-by-year balance, deposits, and interest earned.
| Year | Balance | Deposits | Interest |
|---|---|---|---|
| 1 | $7,679.82 | $2,400 | $279.82 |
| 2 | $10,482.76 | $2,400 | $402.93 |
| 3 | $13,414.46 | $2,400 | $531.70 |
| 4 | $16,480.84 | $2,400 | $666.38 |
| 5 | $19,688.09 | $2,400 | $807.25 |
- 1$7,679.82
- 2$10,482.76
- 3$13,414.46
- 4$16,480.84
- 5$19,688.09
Compound Interest Calculator: Make Time Your Ally
Key Points
- Compound interest pays interest on previously earned interest — the longer the horizon, the larger the gap vs simple interest.
- The formula is FV = PV × (1 + r/n)^(nt), with optional annuity terms for regular contributions.
- More frequent compounding raises the effective yield (APY); continuous compounding is the theoretical maximum.
How to calculate compound interest
Compound interest is interest earned on both your original principal and the interest already added to your balance. Each period's interest is calculated on a larger balance than the last, so growth accelerates over time. Over decades it is the difference between modest savings and life-changing wealth.
- Start with your principal (PV) — the balance you begin with.
- Divide the annual nominal rate (r) by the number of compounding periods per year (n) to get the per-period rate.
- Raise (1 + r/n) to the power of nt, where t is the number of years.
- Multiply by the principal, then add an annuity term for each recurring contribution growing over its remaining time.
Worked example
Deposit $10,000 at 5% compounded monthly for 10 years with no additional contributions. The balance grows to about $16,470. The same deposit earning simple interest at 5% for 10 years grows only to $15,000. Compounding adds roughly $1,470 — purely from interest earned on prior interest.
APY vs APR
APR is the nominal rate before compounding. APY is the effective annual yield after compounding — it accounts for how often interest is added to the balance. A 5% APR compounded monthly equals about 5.12% APY. Always compare savings products on APY, not APR — APY normalizes for differences in compounding frequency.
How to use compound interest in planning
Start as early as you can — time is the most valuable input in the formula. Even modest contributions deposited consistently from your 20s outperform much larger deposits started in your 40s. Reinvest interest rather than withdrawing it. Choose accounts with higher APY when comparable in safety.
Limitations
The calculator assumes a fixed nominal rate, which real-world savings accounts almost never deliver — bank rates float with market conditions. Inflation erodes the real value of nominal returns; a 5% nominal return with 3% inflation is a 2% real return. Tax on interest reduces effective compounding for taxable accounts.
Time + consistency beats market timing
Compound interest rewards patience. The math is unforgiving — you cannot manufacture decades of compounding after the fact — so the single biggest decision is to start now and contribute consistently.
Frequently asked questions
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