Lump-sum savings, 10 years
Input
Principal: 10,000, Rate: 7%, Compounding: Annually, Years: 10
Expected result
Final amount: $19,671.51 — Interest earned: $9,671.51 — Total return: 96.72%
Calculators
Compound Interest
Calculate compound interest growth
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About this tool
Compound interest is the mechanism by which earned interest itself begins to generate further interest over time, producing exponential rather than linear growth. This calculator applies the standard formula A = P(1 + r/n)^(nt) — where P is principal, r is annual rate, n is compounding frequency, and t is time in years — to project how a single lump sum grows over 1 to 100 years. You can choose annual, semi-annual, quarterly, monthly, or daily compounding to match real-world savings accounts, fixed deposits, or bond products. The result shows the final amount, the total interest earned, and the total return as a percentage of your principal, and it updates as you type. Amounts are labelled in dollars, but the maths works for any currency. Estimates exclude fees and taxes, and no regular deposits are added, so use it for one-off investments rather than monthly savings plans.
Why use it
Accurate Compounding Frequencies: Choose daily, monthly, quarterly, semi-annual, or annual compounding to match how your bank or fund calculates returns. Different frequencies produce meaningfully different final balances over long horizons.
Standard Formula: The calculator uses A = P(1 + r/n)^(nt), the same formula banks and financial textbooks use, so you can verify the output by hand.
Total Return at a Glance: Alongside the final amount and interest earned, the tool shows the total percentage return on your principal, which makes it easy to compare horizons and rates.
Live Updates: Every change to the principal, rate, term or frequency recalculates the result instantly, so you can try what-if scenarios quickly.
Complete Privacy: Investment and savings figures are sensitive. All computation happens in your browser with no server calls and no data storage.
How to use
- Enter your starting principal — the lump sum you are investing or depositing today
- Enter the annual interest rate as a percentage, for example 7 for 7% per year
- Set the number of years the money stays invested, from 1 to 100
- Select the compound frequency: annually, semi-annually, quarterly, monthly, or daily
- Read the final amount, interest earned, and total return, which update as you type
When it helps
- When planning how much a current savings account or fixed deposit balance will grow to by retirement age
- When comparing two investment products with different quoted interest rates and different compounding frequencies
- When a student wants to understand the compound interest concept for an exam problem or finance assignment
- When checking a bank's maturity figure for a fixed deposit or certificate of deposit
- When estimating how long a one-off windfall should stay invested to reach a target amount
Examples
Monthly compounding, long term
Input
Principal: 500,000, Rate: 8%, Compounding: Monthly, Years: 15
Expected result
Final amount: $1,653,460.74 — Interest earned: $1,153,460.74
Default settings
Input
Principal: 10,000, Rate: 8%, Compounding: Monthly, Years: 10
Expected result
Final amount: $22,196.40 — Interest earned: $12,196.40 — Total return: 121.96%
Tips
- Time in the market matters more than rate — starting five years earlier often beats earning an extra percentage point of return
- Use the Rule of 72 to sanity-check results: divide 72 by the rate to estimate years to double your money
- For long projections, enter a rate reduced by expected inflation — nominal numbers can be misleadingly large
- Switch the compound frequency between annually and monthly to see how much the bank's crediting schedule is worth
- Subtract your marginal tax rate from the headline interest rate when comparing taxable and tax-exempt products
Frequently Asked Questions
What is the compound interest formula?
The standard formula is A = P(1 + r/n)^(nt), where A is the final amount, P is principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the number of years. The result A includes both the original principal and all accumulated interest.
How does compounding frequency affect returns?
More frequent compounding means interest is calculated and added to the balance more often, so it starts earning its own interest sooner. The difference between annual and daily compounding is small for short periods but becomes significant over decades. Moving from annual to monthly compounding on a 7% rate adds roughly 0.23 percentage points to the effective annual yield.
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal throughout the entire term: Interest = P × r × t. Compound interest is calculated on the growing balance, so each period's interest is added to the principal before the next period's calculation. Over time, compound interest generates dramatically more growth than simple interest at the same rate.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money. For example, at 8% per year, money doubles in approximately 9 years (72 ÷ 8). The rule is most accurate for rates between 6% and 10%.
Can I add monthly contributions or a SIP?
No. This calculator projects a single lump sum only. Regular deposits follow a separate annuity formula, so a monthly savings plan needs a dedicated SIP or savings calculator.
Does it adjust for inflation?
No, the result is nominal. To approximate real growth, enter a rate reduced by your expected inflation — for example 7% return minus 3% inflation gives roughly 4%.
Why is daily compounding only marginally better than monthly?
The incremental benefit of more-frequent compounding diminishes rapidly as frequency increases. Going from annual to monthly compounding provides a meaningful boost, but moving from monthly to daily adds only fractions of a percent annually.
Does this account for taxes on interest?
The calculator shows gross pre-tax growth. To get a net-of-tax estimate, subtract your expected tax rate from the interest rate before entering it. For example, at a 20% tax rate on a 7% return, enter 5.6% as the effective rate.
Explore the category
Glossary
- Principal (P)
- The original sum of money deposited, invested, or borrowed before any interest is applied. In compound interest calculations, the principal grows each compounding period as interest is added to it.
- Annual Rate (r)
- The stated yearly interest or return rate expressed as a decimal or percentage. In the compound interest formula, this rate is divided by the compounding frequency n to get the per-period rate.
- Compounding Frequency (n)
- The number of times per year that interest is calculated and added to the balance. Common values are 1 (annual), 12 (monthly), and 365 (daily). Higher frequency increases the effective annual yield slightly.
- Time in Years (t)
- The total duration of the investment or deposit in years. Because compound interest grows exponentially, doubling t more than doubles the final balance at any positive rate.
- Effective Annual Rate (EAR)
- The actual annual return after accounting for intra-year compounding. EAR = (1 + r/n)^n − 1. It is always higher than the nominal annual rate when n is greater than 1, and is the fairest basis for comparing products with different compounding schedules.
- Compound Interest Formula A = P(1 + r/n)^(nt)
- The standard formula relating final amount A to principal P, annual rate r, compounding frequency n, and time in years t. It is the foundation of savings account, fixed-deposit, and bond growth calculations worldwide.
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