Enter an amount, a rate and a number of years to see what compounding turns it into. Add a regular contribution to see how much of the final figure comes from you, and how much from the interest.
This is a projection based on a constant rate. Real investment returns vary, and past returns do not predict future ones.
Result
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Simple interest is paid on the original amount and nothing else. Compound interest is paid on the balance, which includes the interest already earned — so the interest itself starts earning interest. That single difference is why the curve bends upward instead of running straight, and why time matters more than rate over long periods.
How often interest is added changes the outcome, but less than people expect. A nominal 6% compounded monthly is an effective 6.168% a year; compounded daily it is 6.183%. Compounding continuously — the mathematical limit — gives 6.184%. Almost all of the benefit arrives by the time you reach monthly. This calculator converts everything to an effective annual rate first, which is what makes different offers comparable.
Regular contributions follow their own schedule, so they are handled separately as an annuity and then added. Contributions made at the start of each period earn one extra period of interest, which over decades is worth noticeably more than it sounds.
A = P × (1 + r ÷ n)^(n × t)
With continuous compounding the expression becomes A = P × e^(r × t).
F = C × ((1 + i)^k − 1) ÷ i
Multiply by (1 + i) when contributions are made at the start of each period.
Compounded monthly, the effective annual rate is 6.168%. After ten years the balance is about 18 194.
At simple interest the same deposit would have earned 6 000. Compounding adds roughly 2 194 on top — interest earned by interest.
The contributions alone total 24 000 over ten years, and grow to about 32 800.
The final balance passes 51 000. More than a third of it is interest, and the contributions — not the starting amount — are doing most of the work.
A mental shortcut: divide 72 by the interest rate to get the rough number of years it takes to double your money. At 6%, that is 12 years; the exact answer here is 11 years and 11 months.
It works well between about 4% and 12%, and drifts outside that range.
Barely. At 6%, daily compounding earns about 0.015 percentage points a year more than monthly — around 1.50 on a balance of 10 000. Banks advertise it because it sounds better than it is.
What actually matters is the effective annual rate, which is why this calculator shows it.
The quoted, or nominal, rate ignores compounding within the year. The effective rate includes it. A nominal 6% compounded monthly really pays 6.168%. When comparing two products, compare effective rates.
No. The figures are before tax and in nominal terms. Tax on the interest reduces the balance, and inflation reduces what the final amount buys. To see growth in real terms, enter the rate minus expected inflation.
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