Compound Interest Calculator

Calculate how much your money can grow over time

Initial amount

Monthly contribution

Interest rate (%)

Time period

What is Compound Interest?

Compound interest is known as "interest on interest". Unlike simple interest, where only the initial amount earns interest, with compound interest the earnings also start earning interest in subsequent periods, creating an exponential growth effect.

It is the fundamental principle behind long-term investment growth.

How Does Compound Interest Work?

Imagine you invested $1,000 with 1% interest per month:

Month 1: $1,000 + (1% of $1,000) = $1,010

Month 2: $1,010 + (1% of $1,010) = $1,020.10

Month 3: $1,020.10 + (1% of $1,020.10) = $1,030.30

Note that each month, interest is calculated on the new total, including previous interest. Over time, this effect multiplies significantly.

How to Use the Calculator

1
Enter the initial amount you already have invested. If starting from zero, enter 0.
2
Enter the monthly contribution you plan to make. This is the amount you will invest every month.
3
Set the expected interest rate:
- Choose whether to enter annual or monthly rate
- For conservative investments: 6-8% per year
- For moderate investments: 8-12% per year
- For aggressive investments: 12%+ per year
4
Define the time period:
- Choose years or months
- Long-term investments (10+ years) maximize compound interest
5
Click Calculate to see the results!

Practical Examples

Example 1: Starting from Zero

Initial amount: $0 | Monthly contribution: $500 | Rate: 0.5% per month | Period: 20 years

Result: Investing $120,000, you will have approximately $230,000

Example 2: With Initial Amount

Initial amount: $10,000 | Monthly contribution: $1,000 | Rate: 10% per year | Period: 15 years

Result: Investing $190,000, you will have approximately $450,000

Example 3: Long Term

Initial amount: $5,000 | Monthly contribution: $300 | Rate: 8% per year | Period: 30 years

Result: Investing $113,000, you will have approximately $450,000

Tips to Maximize Compound Interest

Start early: The more time your money has to grow, the greater the compound interest effect.

Be consistent: Regular monthly contributions are more effective than sporadic investments.

Reinvest earnings: Never withdraw interest. Let it work for you.

Be patient: The true power of compound interest appears in the long term (10+ years).

Increase contributions over time: As your income increases, increase your contributions too.

Frequently Asked Questions

What's the difference between compound and simple interest?

With simple interest, only the initial amount earns interest. With compound interest, the earnings also earn interest, creating exponential growth.

What interest rate should I use in the calculator?

Use the expected average return of your investment. For conservative investments (fixed income), 6-8% per year. For stocks, historically 10-12% per year.

Is it better to enter monthly or annual rate?

Depends on your investment. Savings accounts and some funds report monthly rates. Many other investments report annual rates. The calculator converts automatically.

Are the results guaranteed?

No. The calculator shows a projection based on the rate entered. Real investments can have variations, especially in variable income.

Is it worth investing small amounts?

Yes! Even contributions of $100-200 per month, over 20-30 years, can turn into significant amounts thanks to compound interest.

When do I start seeing significant results?

The exponential effect of compound interest becomes more visible after 10-15 years of consistent investing.

Should I include inflation in the calculation?

This calculator shows nominal values. For real values (discounting inflation), subtract expected inflation from the interest rate.

How can I increase my rate of return?

Diversify investments, consider variable income (with more risk), and periodically review your applications to optimize returns.