What is compound interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, it causes your investment to grow exponentially over time.

What is the compound interest formula?

The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the compounding frequency per year, and t is the time in years.

How often should I compound interest?

The more frequently interest is compounded, the more you earn. Monthly compounding is the most common for investment accounts and ETFs.

What is a realistic annual return for investing?

Historically, global stock market index funds have returned approximately 7-10% per year before inflation. After inflation, real returns are typically 4-7%. Past performance does not guarantee future results.

Compound Interest Calculator (With Monthly Contributions)

Free Tool

Compound Interest Calculator

See how your money grows over time — with monthly contributions and inflation adjustment.

Final Balance

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Total Contributions

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Interest Earned

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Return on Investment

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Currency

Initial Investment Starting lump sum

0250k500k

Monthly Contribution Added each month

02,5005,000

Annual Return Rate Expected % per year

0%10%20%

Time Period Investment horizon

yrs

1yr25yrs50yrs

Compounding Frequency

Adjust for Inflation

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Growth Over Time

Try different values below to see how your investment could grow over time.

What your results mean

The final balance shows the estimated value of your investment over time.
Total contributions represent how much money you invested.
Interest earned shows how much growth comes from compound interest — in other words, money generated by your money.

How compound interest works

Compound interest means you earn returns not only on your initial investment, but also on the returns it generates over time.

As your investment grows, the amount of interest you earn increases, creating a compounding effect.

This is why long-term investing is so powerful — your money starts working for you.