# Compound Interest Calculator

Compound Interest Calculator allows you to check how much money can grow over time using the power of compound interest.

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Want to grow your wealth faster? Use our Compound Interest Calculator to instantly create an exact projection for compound growth for your savings account or investment over a period of time, on the basis of the anticipated rate of interest. Just enter the value for which you wish to calculate the compound interest and other necessary details like the annual interest, compounding period, additional payments(optional), etc. Then, just press the Calculate button and you will get the results on your device's screen within an instant.

Most importantly, the Compound Interest Calculator saves you from all the hassle you face while calculating the compound interest manually. So, use our tool in order to make your interest-related calculations accurate and fast.

In addition, you can calculate the future value, the total interest earned, and the total yield in terms of percentage. Also, it gives a comparison between the total amount of money deposited and the total interest earned, in form of a pie chart. In addition, it provides the graphical representation of the future values over time, consisting of the original principal and the cumulative interest. Lastly, the Compound Interest Table shows the balance and the payment made in each period.

### What is Compound Interest?

Money makes money, and the money that money makes, makes more money. Compound interest is the interest earned on the money saved plus the interest earned. It speeds us the growth of your savings or investments. Inversely, it increases the debt balances you owe over time. In short, with compound interest, your interest earns interest.

Let's understand this term with an example.

##### Example:
• Let's say you have \$10,000 in your savings account that earns 4% annual interest. In a year, you will earn \$400 making a new balance of \$10,400.
• In the second year, you will earn 4% on the balance at the end of the first year, which is \$10,400. So, you will earn \$416 as interest and make a new balance of \$10,816 at the end of the second year.

Moreover, you can make additional payments at the start or the end of the compounding year. Also, the interest is compounded at different intervals of time. Such as annually, monthly, daily, and even repeatedly.

Consider that the interest you earned compounded monthly rather than annually on your savings account. Then, at the end of ten years, your total balance will be \$14,908. Also, you will earn an additional \$106 from interest being compounded more repeatedly.

### How to Calculate Compound Interest?

So, till now we have gained a lot of knowledge about the term "Compound Interest". Now let's learn how to calculate it manually.

However, our compound interest calculator provides you with the most effortless way to calculate the growth in your money over time with the compounding interest. But if you still wish to calculate it on your own, then follow the instructions below.

So, before getting started, let's know about the compound interest formula. Because it's key to getting all the required results.

#### Compound Interest Formula

Where,

A = Final amount (principal + interest earned)
P = Principal amount (present value)
r = Annual interest rate (in decimal)
n = Number of compounding periods per year
t = Total time (in years)

Now let's take an example to understand it more deeply.

##### Example:

Suppose you make an investment of \$5000 at the rate of 5% annual interest compounded monthly. Find out what your investment will become after 10 years.

##### Solution:

Here,

P = \$5000
r = 5/100 = 0.05 (in decimal)
n = 12 (compounded monthly)
t = 10

Now place all the values in the compound interest formula.

A =  P( 1 +
 r n
)nt
A =  5000( 1 +
 0.05 12
)(12 × 10)

A = 5000 × (1.0041667)120

A = 5000 × 1.647016

So, A = 8235

Thus, your investment becomes \$8,235 earning you a total interest of \$3,235 in 10 years.

### How to use Compound Interest Calculator?

1. Firstly, open the Compound Interest Calculator on any device with a stable internet connection and browser support.
2. Choose the type of currency in which you wish to make the calculations.
3. Enter the principal amount in the first input field.
4. Then enter the annual interest rate in percentage.
5. Also, select how the interest will be compounded. There are three options. Monthly, quarterly, or yearly. By default, it is selected to "compounded yearly".
6. Then enter the time period for which you wish to calculate the interest.
7. After that, select how many years, quarters, months, weeks, or days, you want to calculate the interest for. By default, it's "Years".
8. If you want to include any additional amount to your principal value, then enter the amount in the Additional Payments tab. Note that this is optional.
9. Also, you can select at what interval the amount will be added. Such as monthly, quarterly, or yearly. By default, this is "monthly".
10. Now select whether you want the additional amount to be added at the start or end of the compounding period.
11. Lastly, press the Calculate button to get the final results.
12. As a result, you will get future value, total deposited amount, total interest amount, and total yield. Also, our tool displays the final future value in a pie chart and future values by time in a bar chart. Moreover, you can see the compound interest table for a given period of time with the balance amount.
13. Use the Reset button to clear the form and then you can start the new calculation.

#### Features of Compound Interest Calculator

• Easy and free-to-use: Compound Interest Calculator is designed in a way to give its users a smooth experience. Besides that, it is absolutely free to use and does not include any type of charge.
• Fast and accurate: Our tool gives 100% accurate results, that too instantly.
• No pre-requisites at all: Our calculator does not require you to login or signup or install anything in order to use it.
• All-in-one tool: Most importantly, our tool is absolutely comprehensive. Because you do not have to use different tools for your calculations. It serves all your needs.

#### Magic of Compounding

Compounding is a mathematical process to grow the potential earnings from an investment or savings. It makes sure that the interest is earned on the original amount as well as on the returns. It is a continual process and benefits the most over the long term. Compounding can turn even small investments into large ones if you give enough time.

Here, we are discussing some of the tips for you to make maximum profit from the compounding process.

##### 1. Begin early

Start making investments the moment you start earning. Remember that compounding works best when you start early and keep on investing for the long term.

Let's say you start investing now. You make an investment of \$1000/month for 5 years at a 5% rate of annual interest for yearly compounding. Your friend made the same investment as you but started 2 years later than you. Then, your maturity amount will be \$70,347 and your friend will get \$40,564. A total loss of \$29,783. So, it's better to begin early.

##### 2. Discipline

Maintain discipline with respect to your investments if you wish to benefit from compounding. So, ensure that you invest regularly.

##### 3. Show Patience

Patience is the key to profits in compounding. Do not let your personal biases or the changes in the market influence you.

## FAQs

Use the following compound interest formula and figure out the final value(A).

A =  P( 1 +
 r n
)nt

Simple interest is calculated on the principal amount only. While compound interest is calculated on the previous interest plus the principal amount. Also, in simple interest, the interest for each year is the same, unlike compound interest.

It is useful in various ways that are given below:

• It's absolutely free to use.
• No manual calculation is required.
• You get options in deciding the compounding period.
• You can also include additional payments, if you want to, at the start or end of each compounding period.
• It gives instant and accurate results.
• It earns you interest on not just the money you saved but also the interest earned through that money.
• The more time your money spends in a compound interest account, the more will be the benefits.
• Putting money in investment avenues with compound interest can alleviate the detrimental effects of inflation.
• Most importantly, it's a good source of the long-term cash management plan.

By this, we mean at what interval of time the interest will be accrued. For example, every month, every quarter (every three months), or annually.