See how a deposit grows when interest is added back to the balance and starts earning interest itself.
Compound interest is interest calculated on both your original balance and any interest that balance has already earned. Because each round of interest becomes part of the base for the next round, growth accelerates over time rather than staying flat — this is the core mechanic behind long-term saving and investing.
P is your starting principal, r the annual interest rate, n the number of times interest compounds per year, t the number of years, and PMT any regular monthly contribution added on top.
Daily compounding produces a slightly higher return than annual compounding at the same stated rate, because interest is credited — and starts earning its own interest — more often. The difference is usually small at typical savings rates, but it grows with higher rates and longer time horizons.
This calculator assumes a constant rate of return, which is realistic for a savings account or CD but not for investments like stocks, where returns vary year to year. For volatile investments, treat the output as a simplified projection rather than a guarantee.
Simple interest is calculated only on the original principal every period. Compound interest is calculated on the principal plus any interest already earned, so the balance grows faster the longer it compounds.
Include them if you plan to add money regularly, like an automatic transfer into a savings or retirement account. Leave it at zero to see the growth of a single lump sum on its own.
No, the future value shown is in today's dollars terms of contribution but does not subtract inflation. To estimate real purchasing power, subtract your expected average inflation rate from the interest rate before calculating.
Use whatever your bank or provider states in their terms — most savings accounts compound daily or monthly, while some bonds or CDs compound annually or semi-annually.