Compound Interest Calculator: The Power of Time
Watch your wealth grow exponentially over time.
Compound interest has been called the eighth wonder of the world. Unlike simple interest, which only calculates returns on your initial principal, compound interest calculates returns on your principal plus the interest you’ve already earned. Our calculator helps you visualize this “snowball effect” to plan for a secure financial future.
Compound Interest Calculator
Calculate how your money grows with compounding
Adjust numbers to see the power of compounding
The Compound Interest Formula
To understand the math behind your wealth, we use the standard compounding formula:
A = P × (1 + r ÷ n)n × t
- A: The future value of the investment.
- P: The principal investment amount.
- r: The annual interest rate (decimal).
- n: The number of times that interest is compounded per year.
- t: The number of years the money is invested.
Why Frequency Matters
The more frequently interest is added to your account, the faster your balance grows. On familyhealthcalc.com, you can toggle between different compounding periods:
- Daily: Common for credit cards and some high-yield savings.
- Monthly: The standard for most savings accounts and mortgages.
- Quarterly/Annually: Often seen in bonds and fixed-term certificates.
The “Cost of Waiting”
Waiting just five years to start saving can result in a significantly smaller nest egg. For example, $500/month invested at 7% starting at age 25 results in nearly double the wealth at age 65 compared to someone starting at age 35.