Compound Interest Calculator: Daily, Monthly & Yearly
Use our free compound interest calculator to see how your investments, 401k, IRA, or savings can grow over time. Calculate with daily, monthly, or yearly compounding and add regular contributions to see the true power of compound growth.
Investment Details
Growth Projection
Zero Volatility Compound Growth Tips
- Start early: Time is the most powerful factor in compound growth
- Be consistent with contributions to maximize the compounding effect
- Consider tax-advantaged accounts to enhance your effective return
- Reinvest dividends and interest to accelerate compound growth
Understanding Compound Interest
Compound interest is often called "the eighth wonder of the world" because it allows your money to grow exponentially. Unlike simple interest (calculated only on the principal), compound interest is calculated on both your initial investment AND the accumulated interest.
The Compound Interest Formula
A = P(1 + r/n)nt
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Number of times interest compounds per year
- t = Number of years
Compounding Frequency Comparison
See how $10,000 grows at 5% interest over 10 years with different compounding frequencies:
| Compounding | Times/Year | 10-Year Value | Interest Earned |
|---|---|---|---|
| Yearly | 1 | $16,289 | $6,289 |
| Quarterly | 4 | $16,436 | $6,436 |
| Monthly | 12 | $16,470 | $6,470 |
| Daily | 365 | $16,487 | $6,487 |
| Continuous | ∞ | $16,487 | $6,487 |
The Power of Starting Early
Time is the most powerful factor in compound interest. Here's how $10,000 grows at 7% annual return:
| Years | Value | Total Growth |
|---|---|---|
| 5 years | $14,026 | +40% |
| 10 years | $19,672 | +97% |
| 20 years | $38,697 | +287% |
| 30 years | $76,123 | +661% |
| 40 years | $149,745 | +1,397% |
The Rule of 72
Quick Doubling Estimate
Divide 72 by your interest rate to estimate years to double your money. At 7%, money doubles in ~10 years. At 10%, it doubles in ~7 years.
401k & IRA Growth
With average 7% returns, a 401k contribution of $500/month from age 25 to 65 grows to over $1.2 million. Starting at 35 yields only ~$567,000.
Impact of Contributions
Regular contributions dramatically accelerate growth. $10,000 initial + $500/month at 7% for 30 years = $680,000 vs. $76,000 with no contributions.
Inflation Consideration
Real returns = nominal returns - inflation. If you earn 7% and inflation is 3%, your real return is 4%. Our calculator can factor in inflation.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates exponential growth over time, making it one of the most powerful concepts in investing.
How much will $10,000 grow with compound interest?
At 7% annual return compounded monthly, $10,000 grows to $20,097 in 10 years, $40,387 in 20 years, and $81,165 in 30 years. Adding $500/month contributions increases these to $96,838, $270,869, and $612,438 respectively.
Is daily or monthly compounding better?
Daily compounding earns slightly more than monthly, but the difference is minimal. $10,000 at 5% for 10 years: daily = $16,487, monthly = $16,470—a difference of only $17. Focus more on the interest rate and time horizon than compounding frequency.
How do I calculate compound interest for my 401k?
Enter your current 401k balance as the principal, expected annual return (historically 7-10% for stock-heavy portfolios), monthly contribution amount, and years until retirement. Our calculator will show your projected balance.
What's a realistic interest rate to use?
For stock market investments (401k, IRA): 7-10% historically. For savings accounts: 4-5% (high-yield). For CDs: 4-5%. For bonds: 4-6%. Always consider inflation when evaluating real returns.
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Disclaimer: This compound interest calculator provides estimates based on the inputs you provide. Actual investment returns will vary based on market conditions, fees, and other factors. Past performance does not guarantee future results. This tool is for educational purposes only and does not constitute financial advice.