How to use this calculator

1. Enter your starting amount — the principal you begin with.
2. Set the annual interest rate as a percentage.
3. Choose how often interest compounds: yearly, quarterly, monthly, or daily.
4. Enter how many years the money stays invested.
5. Optionally add a deposit you make every period.

How it works

Compound interest is interest earned on both your original money and the interest it has already earned. Because each period's interest is added to the balance, the next period earns interest on a slightly larger amount — so the balance grows faster and faster. That snowball effect is what separates compound interest from simple interest, which only ever pays interest on the original principal.

Two things control how big the snowball gets: the rate and the compounding frequency. The formula uses the periodic rate $i = r/n$ and the total number of periods $N = nt$, where $r$ is the annual rate, $n$ is how many times a year interest is applied, and $t$ is the number of years. Compounding monthly ($n = 12$) credits interest twelve times a year instead of once, so it edges out annual compounding at the same rate.

Time is the most powerful ingredient. Because growth compounds, money left untouched for longer doesn't just add up — it multiplies. Small, regular deposits amplify this further, since every deposit starts earning its own compound interest the moment it lands.

Worked example

Suppose you invest $1{,}000$ at a $5\%$ annual rate, compounded monthly, for 10 years. The periodic rate is $i = 0.05/12 \approx 0.00417$ and the number of periods is $N = 12 \times 10 = 120$. Plugging into $A = P(1+i)^N$ gives about \$1,647 — roughly \$647 of interest on your original \$1,000.

Now add a \$100 deposit every month. After the same 10 years the balance climbs past \$17,000, because each monthly deposit compounds too. Try both scenarios in the calculator above to see how much the regular deposits add.