This compound interest calculator shows how an investment grows over time when your returns earn returns of their own — the effect Albert Einstein reputedly called the most powerful force in finance.
Compound growth follows A = P(1 + r/n)^(n·t), where P is the starting amount, r is the annual rate, n is how many times per year interest compounds, and t is the number of years. The more frequently interest compounds and the longer you stay invested, the larger the result.
The single biggest driver of compound growth is time. Money invested in your twenties has decades to compound, so even modest amounts can outgrow much larger sums invested later. Starting early usually beats starting big.
It is interest earned on both your original money and on the interest it has already earned, so growth accelerates over time.
Simple interest is paid only on your original amount. Compound interest is paid on the original plus accumulated interest, which compounds the growth.
More frequent compounding (monthly or daily) grows money slightly faster than annual compounding, though the difference is smaller than the effects of rate and time.
This calculator provides estimates for general information only and is not financial advice. Figures are approximate — confirm exact numbers with your lender or a qualified adviser.