What is the Rule of 72?

Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 7%, money doubles in roughly 72/7 = 10.3 years. At 10%, it doubles in about 7.2 years. It works best for rates between 2% and 20%.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously earned interest, leading to exponential rather than linear growth. The difference is small over short periods but enormous over decades.

How often should interest compound for maximum growth?

More frequent compounding produces slightly higher returns. Daily compounding yields marginally more than monthly, which yields more than annual. The difference is significant mainly at very high rates or very long time horizons.

What is continuous compounding?

Continuous compounding is the mathematical limit as compounding frequency approaches infinity: A = P × e^(r×t). At 7% for 10 years, continuous compounding gives $20,138 vs. $20,097 for daily compounding — the difference is minimal in practice.

What annual return should I use for stock market investments?

The long-run average annual return of broad stock market indices like the S&P 500 is roughly 7–10% before inflation (about 5–7% after inflation). Use a conservative 6–7% for long-term planning to account for market variability and sequence-of-returns risk.

Does compound interest work against me on debt?

Yes. On credit cards and loans, compound interest works against you — unpaid balances grow rapidly. This is why paying off high-interest debt quickly is mathematically equivalent to earning that same interest rate as a guaranteed investment return.

Finance

↵ to calculate

Compound Interest Calculator

Calculate compound interest growth with regular monthly contributions. Compare balance with and without contributions.

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How to use this calculator

👉 Fill in the boxes below and your answer appears instantly — no maths needed, we do it all for you! 🎉

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In plain English — what does this do?

🌱 When you save money in a bank, the bank gives you a small gift (called interest) for keeping it there. Then next year, you get a gift on your gift too! This tool shows how much your money will grow over time.

📌 Direct Answer & Summary

A compound interest calculator shows how an investment grows when interest is earned not just on your principal but also on previously accumulated interest. Adding regular monthly contributions dramatically accelerates growth — this calculator shows both the balance from principal alone and the balance including contributions so you can see the real impact of consistent investing. The Rule of 72 gives a quick mental shortcut: divide 72 by your annual rate to find approximately how many years it takes to double your money.

Currency

💰 Starting money (Principal)

How much money are you starting with?

📈 Yearly interest rate (%)

The % bonus the bank gives you each year

📅 How many years?

How long will the money stay invested?

🔄 How often is interest added?

➕ Extra money added every month (optional)

Leave at 0 if you're not adding money monthly

What is Compound Interest Calculator?

How to use it

1️⃣ Enter your initial investment (principal).
2️⃣ Input the annual interest rate.
3️⃣ Enter the number of years.
4️⃣ Select how often interest compounds.
5️⃣ Optionally add a monthly contribution amount.
6️⃣ Review future value with and without contributions, total interest, and growth percentage.

Formula

Without contributions: A = P × (1 + r/n)^(n×t). With monthly contributions: A = P × (1 + r/n)^(n×t) + PMT × [(1 + r/n)^(n×t) − 1] / (r/n). Rule of 72: Years to double ≈ 72 / annual rate%.

💡 See it in action — a real example

Investing $10,000 at 7% compounded monthly for 20 years grows to $40,388. Adding $200/month brings the total to $142,239 — the contributions themselves total $48,000, but compound growth turns them into an additional $101,851 in interest.

❓ Common questions

What is the Rule of 72?: Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 7%, money doubles in roughly 72/7 = 10.3 years. At 10%, it doubles in about 7.2 years. It works best for rates between 2% and 20%.
What is the difference between simple and compound interest?: Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously earned interest, leading to exponential rather than linear growth. The difference is small over short periods but enormous over decades.
How often should interest compound for maximum growth?: More frequent compounding produces slightly higher returns. Daily compounding yields marginally more than monthly, which yields more than annual. The difference is significant mainly at very high rates or very long time horizons.
What is continuous compounding?: Continuous compounding is the mathematical limit as compounding frequency approaches infinity: A = P × e^(r×t). At 7% for 10 years, continuous compounding gives $20,138 vs. $20,097 for daily compounding — the difference is minimal in practice.
What annual return should I use for stock market investments?: The long-run average annual return of broad stock market indices like the S&P 500 is roughly 7–10% before inflation (about 5–7% after inflation). Use a conservative 6–7% for long-term planning to account for market variability and sequence-of-returns risk.
Does compound interest work against me on debt?: Yes. On credit cards and loans, compound interest works against you — unpaid balances grow rapidly. This is why paying off high-interest debt quickly is mathematically equivalent to earning that same interest rate as a guaranteed investment return.

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