Compound interest is the 8th wonder of the world. With this calculator you see exactly how your money grows exponentially over time.
Enter starting amount, annual interest rate, time period and optional monthly contributions for a complete growth overview.
The key difference between simple and compound interest: compound interest earns interest on your previously earned interest, creating exponential growth.
This calculator is most useful when making decisions where time horizon matters — choosing between paying off a low-rate debt versus investing the money, deciding how many years to extend an investment before withdrawing, or comparing two savings accounts with different compounding frequencies. It is also the right tool for visualising the cost of starting late: run the same monthly contribution starting at age 25 versus 35 and see how significant a 10-year delay really is.
The most pervasive mistake is overweighting compounding frequency relative to rate and time. Daily compounding on a 3% account does not remotely approach monthly compounding on a 4% account — rate dominates frequency in every realistic scenario. A second error is ignoring inflation when projecting long-term savings: £100,000 in 30 years is not £100,000 in today's purchasing power. Use the real return rate (nominal rate minus inflation) for meaningful long-term projections.
Someone invests £500/month from age 30 to 65 at a 6% annual return. Total contributions: £210,000. Final balance: approximately £591,000 — nearly £381,000 is interest earned on contributions alone. Now delay the start by 10 years: same £500/month from age 40, same rate. Total contributions: £150,000. Final balance: approximately £309,000. A £60,000 difference in contributions produces a £282,000 difference in outcome — that is the cost of waiting, and it is invisible without a compound interest calculator.
Compound Interest Formula
A = P × (1 + r/n)^(n×t)
Where A = final amount, P = principal, r = annual interest rate (decimal), n = compounding periods per year, t = time in years.
You invest $10,000 at 7% annual interest compounded monthly for 20 years.
Result: $40,387 — your $10,000 grew to over $40,000 without any extra contributions!
Interest on interest. You earn interest on both your principal and previously accumulated interest, causing exponential growth.
More frequent compounding means more growth. Daily compounding earns slightly more than monthly, which earns more than annual.
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 8%, money doubles in ~9 years.
Simple interest only earns on the original principal. Compound interest earns on the principal plus all accumulated interest.