See how small, regular contributions can grow into significant wealth over time. This Compound Interest Calculator projects the future value of your savings or investments by adding accumulated interest back to your principal.
How to Use This Compound Interest Calculator
Follow these simple steps to calculate your financial growth:
- Enter your Initial Investment: Input the amount of money you are starting with (Principal).
- Add your Contributions: Type in how much money you plan to add monthly or annually.
- Set the Interest Rate: Enter the expected annual interest rate (e.g., 5% or 7%).
- Select Frequency & Time: Choose how often the interest compounds (e.g., Monthly, Annually) and the number of years you will save.
- Click Calculate: Instantly view your total balance and interest earned.
Why Use Our Tool?
- 100% Free: Access professional financial projections at no cost.
- Instant Results: Get real-time data without page reloads.
- Secure: Your financial data is processed in your browser and is never stored.
- Smart Planning: Compare the potential growth of your money against the rising item cost of future purchases to decide if you should buy now or invest.
Understanding the Results
This calculator provides three key figures to help you understand your investment:
- Total Balance: This is the final value of your investment at the end of the selected time period. It includes the money you put in plus all the interest you earned.
- Total Principal: This is the actual cash you contributed from your pocket. It does not include any growth or interest.
- Total Interest: This figure represents your “free money.” It is the profit generated solely by the compounding effect of your interest rate.
Note: Compounding is exponential. This means your money grows faster the longer you leave it untouched, as you earn interest on your interest.
Frequently Asked Questions
Can I use this for investments with a fluctuating cost per unit?
Yes, but you must use an average rate. Investments like stocks or mutual funds have a changing cost per unit, meaning the price varies daily. To use this calculator effectively for those assets, enter an estimated average annual return rate (e.g., 7-10% for the S&P 500) to project long-term growth.
Does this calculator show the true unit cost of a loan?
Yes, if you enter negative values. While designed for savings, you can see how interest increases the total amount you pay back. By calculating the interest over time, you can determine if the final unit cost of a financed purchase is worth the expense compared to paying cash.
How often should I compound my interest?
The more frequent, the better. Selecting “Daily” or “Monthly” compounding will result in a higher return than “Annually.” This is because the interest is added to your balance more often, allowing that new interest to start earning money sooner.