Compound Interest Calculator

Simple interest versus compound interest

Simple interest is calculated only on the original principal. Compound interest, by contrast, is calculated on the principal plus previously earned interest. That repeated reinvestment effect is why compound growth can accelerate over long periods.

This is the reason many people use a free compound interest calculator or investment growth calculator rather than a simple interest calculator. Over short periods the difference may appear small, but over decades it becomes one of the most important drivers of portfolio growth.

Core formulas

The closed-form future value of a lump sum under periodic compounding is straightforward. Recurring contributions require either a future-value annuity formula or a period-by-period simulation when contribution timing and compounding frequency differ.

Recurring deposits and planning use cases

Savings goal calculators, retirement calculators, and future savings calculators often rely on recurring deposits. Even modest monthly contributions can materially increase the ending balance because each new contribution has time to compound.

For practical planning, users usually compare three things: the final balance, the amount personally contributed, and the amount attributable to investment return or savings interest. Looking at those values side by side makes the mechanics of compound earnings much easier to understand.