Compound Interest Calculator
Compound interest is the principle of "interest earning interest" — your investment earnings are added to the principal and in turn generate new earnings. This cumulative effect makes the difference between early and late saving enormous over the long term. Enter your amount, interest rate and duration to see the power of compounding.
| Interest rate | Duration | Simple interest | Compound (monthly) | Difference |
|---|---|---|---|---|
| 5% | 5 years | 12,500 | 12,834 | +334 |
| 5% | 10 years | 15,000 | 16,470 | +1,470 |
| 5% | 20 years | 20,000 | 27,126 | +7,126 |
| 10% | 10 years | 20,000 | 27,070 | +7,070 |
| 10% | 20 years | 30,000 | 73,281 | +43,281 |
* Approximate figures, principal 10,000, monthly compound interest calculation.
What is the difference between simple and compound interest?
Simple interest is calculated on the original principal only. Compound interest is calculated on the principal + accumulated interest, so it grows faster over time. See the comparison table above.
What is the Rule of 72?
The Rule of 72 gives you an estimate for doubling your investment: divide 72 by the annual interest rate. Example: at 6%, your money doubles in ≈12 years (72÷6). At 9%, it doubles in ≈8 years.
Is this tool suitable for loans?
Yes, it can be used to calculate the total amount repaid on a loan with compound interest. For calculating fixed monthly instalments, use the Loan Calculator.
Does higher compounding frequency give a higher return?
Yes. Monthly compounding gives a higher return than annual, and daily compounding higher than monthly. However, the difference becomes negligible beyond weekly — the biggest impact comes from the interest rate and duration.
What is the mathematical formula for compound interest?
Formula: A = P × (1 + r/n)^(n×t) where: A = final amount, P = principal, r = annual interest rate (as a decimal), n = compounding frequency per year, t = number of years.
What is the effect of monthly saving on investment growth?
Small monthly contributions have an enormous long-term impact. Example: adding 100 monthly for 20 years at 7% = total contributions of 24,000, but the actual amount can exceed 52,000 thanks to accumulated interest.
Can the calculator be used to compare bank deposit offers?
Yes, enter the principal, interest rate and duration for each bank offer to compare results. Make sure the compounding frequency matches what the bank specifies (monthly/annual/quarterly).
Compound Interest — The Power of Compounding Explained
Compound interest earns returns on both your original principal and the interest already accumulated. The formula is: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual rate, n is the number of compounding periods per year, and t is time in years.
The Rule of 72
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%: 72 ÷ 6 = 12 years. At 9%: 72 ÷ 9 = 8 years. This mental shortcut works for rates between 2% and 20%.
Compounding frequency matters
Monthly compounding earns slightly more than annual compounding at the same stated rate. A 6% rate compounded monthly has an effective annual rate of 6.17%. The more frequent the compounding, the higher the real return — even if the stated rate is the same.
Last updated: September 2026