How is compound interest calculated?

A = P × (1 + r/n)^(n×t), where P is principal, r is the annual rate, n is compounding periods per year, and t is years. With regular contributions, each contribution compounds from the moment it is deposited.

What is a good compound interest rate?

Historically, broad stock-market index funds have averaged roughly 7–10% annual returns before inflation. High-yield savings accounts typically offer lower, safer rates. Always remember past returns don't guarantee future ones.

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Compound Interest Calculator

Live — results update as you type. See how an investment grows with compound interest. Add monthly or weekly contributions to model real-world saving.

How compound interest works

Compound interest means you earn interest on your interest, not just on your original deposit. The more frequently interest is compounded and the longer your money stays invested, the faster it grows. Over long horizons the difference between, say, 5% and 7% annual returns becomes enormous — that gap is the whole premise of long-term investing.

The formula

For a single lump sum: A = P × (1 + r/n)^(n×t), where P is principal, r is the annual rate, n is compounding periods per year, and t is years. When you add regular contributions, each contribution compounds from the moment it is deposited, which this calculator sums period by period.

Tips

Start early. Because growth snowballs, time matters more than the amount you contribute. Even modest monthly additions become meaningful over decades thanks to compounding.

If you’re starting to invest, compare brokerage sign-up bonuses here — opening an account in minutes is what turns the calculator above into a real plan.