Compound Interest Calculator
Visualize the power of compounding with our flexible calculator. Project the future value of your investments by inputting a starting principal, regular contributions (monthly or annually), and an expected rate of return. See how your money can grow exponentially over time.
Inputs
Enter the required values to calculate.
Result
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More Information
Understanding the Compound Interest Calculator
Compound interest is one of the most powerful concepts in finance, famously described by Albert Einstein as the "eighth wonder of the world." This calculator is your tool to witness its power. It allows you to project the future growth of an investment by calculating interest not just on your initial principal, but also on the accumulated interest from previous periods.
The Formula for Compound Interest with Contributions
While the basic formula is simple, calculating the future value with regular contributions is more complex. The future value (FV) is calculated using the formula:
FV = P(1+r)^t + C[(((1+r)^t - 1)/r)]
- P = The initial principal balance.
- r = The interest rate per period (annual rate divided by compounding periods).
- t = The number of compounding periods.
- C = The periodic contribution.
Principal vs. Contributions vs. Interest
- Principal: The initial amount of money you start with.
- Contributions: Regular additional investments you make (e.g., monthly or annually). This consistently fuels the growth of your investment.
- Interest: The return you earn on your money. With compounding, this interest itself starts earning more interest, leading to exponential growth.
The graph visually breaks down these components, showing how, over time, the interest earned can surpass your total contributions. This is the core principle behind successful long-term investing, as seen in our Retirement Savings Calculator.