Compound Interest Calculator
Calculate compound interest on your investments over time
Input
Result
Year-by-Year Breakdown
| Year | Balance | Interest Earned | Growth |
|---|---|---|---|
| 1 | ₩10,511,619 | ₩511,619 | 5.1% |
| 2 | ₩11,049,413 | ₩537,794 | 10.5% |
| 3 | ₩11,614,722 | ₩565,309 | 16.1% |
| 4 | ₩12,208,954 | ₩594,231 | 22.1% |
| 5 | ₩12,833,587 | ₩624,633 | 28.3% |
| 6 | ₩13,490,177 | ₩656,591 | 34.9% |
| 7 | ₩14,180,361 | ₩690,183 | 41.8% |
| 8 | ₩14,905,855 | ₩725,494 | 49.1% |
| 9 | ₩15,668,466 | ₩762,612 | 56.7% |
| 10 | ₩16,470,095 | ₩801,628 | 64.7% |
This calculator is for informational purposes only and should not be considered as financial advice. Actual values may vary.
What is Compound Interest Calculator?
The Compound Interest Calculator shows you how your money grows when interest is earned not only on the original principal but also on the accumulated interest from previous periods. Often called the eighth wonder of the world, compound interest is the most powerful force in personal finance and investing. The formula used is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. This calculator supports monthly, quarterly, and yearly compounding frequencies, allowing you to compare how different compounding intervals affect your final returns. The effective annual rate is also calculated to show the true annual yield after accounting for compounding. Understanding compound interest is essential for anyone building wealth through savings accounts, fixed deposits, bonds, or investment portfolios. The year-by-year breakdown table shows exactly how your investment grows over time, making it easy to visualize the exponential nature of compound growth. Whether you are setting savings goals, planning for retirement, or evaluating investment opportunities, this calculator provides the clarity you need to make confident financial decisions.
How to Use
- Enter the initial principal.
- Enter the annual interest rate (%).
- Enter the investment period (years) and select compound frequency.
- Review the final amount and year-by-year growth.
Tips & Best Practices
- Start investing as early as possible — even small amounts benefit enormously from compound interest over long time horizons due to exponential growth.
- Choose monthly compounding over yearly when available, as more frequent compounding produces slightly higher returns at the same nominal rate.
- Use the Rule of 72 as a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money.
- Reinvest your interest earnings rather than withdrawing them to maximize the compounding effect on your investment.
- Compare the effective annual rate across different products to make an apples-to-apples comparison, regardless of how frequently each product compounds.
Use Cases
Retirement Planning
Project how much a lump-sum investment today will grow to by retirement age under various interest rate scenarios.
Education Fund
Calculate how much to invest now so compound interest grows it to the amount needed for future tuition costs.
Investment Comparison
Compare two investment products with different compounding frequencies to determine which yields a higher effective return.
Savings Goal
Determine how long it takes for a specific initial deposit to reach your target amount at a given interest rate.
FAQ
What is compound interest?
Compound interest is interest calculated on both the initial principal and accumulated interest. It grows exponentially over time.
How does compound frequency affect returns?
More frequent compounding (monthly > quarterly > yearly) means interest is reinvested more often, resulting in higher total returns.
What is the Rule of 72?
The Rule of 72 is a quick formula to estimate how long it takes for an investment to double. Divide 72 by the annual interest rate to get the approximate number of years.
How much does the gap between simple and compound interest grow over time?
The difference is small initially, but over 10+ years compound interest grows exponentially, creating a significant gap compared to simple interest.
Is my financial data stored?
No, all calculations are performed in your browser and no financial data is sent to or stored on any server.
Is monthly or annual compounding better for investors?
Monthly compounding is better for investors. Even at the same rate, more frequent reinvestment of interest results in slightly higher returns by year-end.
What is the difference between nominal and effective interest rates?
The nominal rate is the stated annual rate without accounting for compounding. The effective rate reflects the actual annual return after compounding. For example, a 12% nominal rate compounded monthly yields an effective rate of approximately 12.68%.
How does inflation affect compound interest returns?
Inflation erodes the purchasing power of your returns. To calculate real returns, subtract the inflation rate from your nominal interest rate. For instance, if you earn 5% but inflation is 3%, your real return is approximately 2%.
Can compound interest work against me?
Yes, compound interest also applies to debt. Credit card balances and loans with compounding interest can grow rapidly if not paid down, making it important to minimize high-interest debt.
What is continuous compounding?
Continuous compounding is the theoretical limit where interest is compounded infinitely often. It uses the formula A = Pe^(rt). In practice, the difference between continuous and daily compounding is negligible for most personal finance calculations.
How much difference does compounding frequency really make?
For most practical interest rates (2-10%), the difference between monthly and yearly compounding is relatively small — typically less than 0.5% per year. However, over decades and with larger sums, this small difference compounds into meaningful amounts.
Is compound interest the same as compound returns in the stock market?
Not exactly. Compound interest guarantees a fixed rate, while stock market compound returns are based on variable annual gains. Stocks can have negative years, so compound returns in equities involve more risk but potentially higher long-term growth.