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Compound Interest Calculator

Project the future value of a lump-sum investment under compound interest at any compounding frequency.

  • compound
  • interest
  • lump sum
  • savings
  • investment
  • apr
  • apy
  • continuous

About Compound Interest Calculator

Compound interest is the engine behind every growing balance — savings accounts, GICs/CDs, dividends-reinvested index funds, even debt that you don't pay down. Each period, the interest earned this period is added to the principal so that next period's interest is calculated on a larger base. Over a decade or three, the difference between compound and simple interest is enormous: a 7% return compounded monthly doubles roughly every ten years.

This calculator handles the lump-sum case (no recurring contributions — for those see the investment calculator). Input the principal, an annual rate, a time horizon, and a compounding frequency: the result is the final value, total interest earned, and the effective annual rate that the chosen compounding frequency produces. A year-by-year breakdown shows how the balance grows.

How to use

Type a starting principal, an annual percentage rate, and the number of years you want to project forward. Pick a compounding frequency — most savings accounts compound daily or monthly, most bonds semi-annually, and "continuous" is the theoretical limit (used in some financial models).

The three result cards show final value, total interest earned, and the effective annual rate (the rate compounded annually that would produce the same growth — useful when comparing offers that compound at different frequencies). The chart and yearly table visualise the growth trajectory; the URL preserves all inputs so you can share or bookmark a specific scenario.

Frequently asked questions

  • What's the difference between APR and APY (or effective rate)?

    APR (annual percentage rate) is the nominal rate before compounding — the figure quoted in headline marketing. APY (annual percentage yield), also called the effective annual rate, accounts for compounding within the year. At a nominal 5% APR compounded monthly, the APY is (1 + 0.05/12)^12 − 1 ≈ 5.116%. Always compare APYs across offers; APRs can look the same while delivering different effective returns.

  • How often does my savings account actually compound?

    Most retail savings accounts and high-interest savings vehicles compound daily and credit interest monthly. GICs and CDs typically compound semi-annually or annually. Bonds usually pay coupons twice a year — semi-annual compounding. Index funds compound continuously in practice because dividends and capital gains accumulate every trading day. Read the fine print: the compounding frequency is part of the actual return.

  • Why does "continuous" compounding only differ slightly from daily?

    Because the marginal benefit of subdividing the compounding period shrinks quickly. At a 5% nominal rate, annual compounding gives 5.000%, monthly gives 5.116%, daily gives 5.127%, continuous (the mathematical limit) gives 5.127%. Past daily, the differences are deep in the third decimal. Continuous compounding is widely used in finance theory and option pricing because it's mathematically convenient, not because it represents real-world account behaviour.

  • How long does it take to double my money? (The Rule of 72)

    A handy rule of thumb: divide 72 by your annual rate (as a whole number) to get the approximate number of years to double. At 7% it's 72/7 ≈ 10 years; at 4% it's 18 years; at 10% it's about 7 years. The rule slightly understates the true doubling time for very high rates and overstates it for very low ones, but in the 4–12% range typical of long-term equity returns it's within a year of the exact figure.

  • What rate should I assume for projections?

    It depends what you're modelling. Cash savings accounts in mid-2026 are paying around 2–4% APY. Long-run real returns on a diversified equity index have been roughly 7% (after inflation) historically. Bonds have averaged 2–3% real. Use the lower end if you're saving for a near-term goal where you can't afford a drawdown; use a long-horizon equity figure for retirement projections where 30+ years of compounding lets you ride out volatility.

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