Compound Interest Calculator

When compounding math actually applies

This page assumes a clean textbook situation: a lump sum, a fixed annual rate, no extra deposits, no fees and no taxes. That is the right model for answering "what would a fixed-rate product do with this money?", for teaching how growth accelerates, and for comparing quoted products on equal terms. Its year-by-year table is deliberately unsentimental about the boring middle years, where compounding feels slow before it becomes impressive.

Do not use it directly when money is added monthly — deposits change every month's balance, and the correct home for that is the Savings Growth Calculator. Variable or volatile returns need scenario thinking, not a single fixed-rate projection: run a conservative, an expected and an optimistic rate through this calculator and plan for the conservative one. And remember every figure below is nominal money — inflation quietly reduces what it buys, which the Inflation Calculator quantifies.

A worked example, step by step

Problem: 5,000 invested at 7% a year, compounded monthly, for 12 years — no deposits.

1. Monthly rate: 7 ÷ 12 = 0.58333% per month (0.0058333).
2. Number of periods: 12 × 12 = 144 months.
3. Growth factor: (1.0058333)¹⁴⁴ ≈ 2.3107.
4. Balance ≈ 5,000 × 2.3107 = 11,553.60.
5. Interest earned: about 6,553.60 — more than the principal you started with.

The doubling is the story: money growing at a steady 7% roughly doubles every 10.2 years, so two doublings plus drift take a 12-year window from 1× to about 2.31×.

5,000 at 7% (monthly compounding) over time

Read the balance column against the interest column: by year 15 the interest, not the deposit, is the majority of the balance. That crossover is compounding's core idea.

Mistakes that overstate real returns

• Mixing compounding frequencies. A 7% rate compounded yearly gives about 9,836 at ten years, not 10,048 — always check how often the product actually capitalises.
• Reading the table as a forecast. A fixed rate is an illustration; markets, savings rates and bond yields all move.
• Forgetting taxes and fees. A 1% annual charge removes far more than 1% of the final figure over decades.
• Ignoring inflation. At 3% inflation, the year-20 nominal balance of 20,193.69 buys roughly what 11,166 buys today.
• Comparing different starting dates. Starting ten years earlier dominates almost any amount difference later; time is the lever here.

Keep exploring

• Simple Interest Calculator — the linear no-compounding version.
• Savings Growth Calculator — the version with monthly deposits.
• CAGR Calculator — one steady rate that summarises a bumpy history.
• Guide: Understanding Compound Interest.
• Guide: CAGR and Inflation Explained.