Compound Interest Calculator
Calculate how compound interest grows your money over time with our free online calculator. Understand the power of compounding and see detailed breakdowns of your investment growth.
Compound vs Simple Interest Growth
Year-by-Year Breakdown
| Year | Opening Balance | Interest Earned | Closing Balance | Simple Interest Balance |
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Rule of 72 Calculator
Find out how long it takes to double your money at a given interest rate.
Key Features
How to Use This Calculator
Understanding Compound Interest
Compound interest is often called the eighth wonder of the world because of its powerful wealth-building effect. Unlike simple interest, which is calculated only on the principal, compound interest is calculated on both the principal and accumulated interest, creating exponential growth.
The compound interest formula is: A = P(1 + r/n)^(nt), where A is the final amount, P is principal, r is annual interest rate, n is compounding frequency per year, and t is time in years. The more frequently interest compounds, the faster your money grows.
Different compounding frequencies produce different results. Annual compounding means interest is added once per year, while monthly compounding adds interest 12 times per year. Daily compounding, common in savings accounts, adds interest 365 times per year.
The Rule of 72 is a quick way to estimate how long it takes to double your money: divide 72 by the interest rate. At 8% interest, your money doubles in approximately 9 years (72/8 = 9).
Our calculator shows you the dramatic difference between simple and compound interest over time. While the difference may seem small in the first few years, it becomes substantial over decades, which is why starting early is crucial for wealth building.