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Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal and the accumulated interest from previous periods. It's often called "interest on interest" and can significantly increase your returns over time.
How does compounding frequency affect results?
More frequent compounding (daily vs. annually) results in higher returns due to interest being calculated and added more often. Daily compounding typically provides the highest returns.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any previously earned interest. Compound interest grows exponentially over time.
How can I use this for investment planning?
Use this calculator to project the future value of investments, compare different interest rates and time periods, and understand the power of compound growth for long-term financial planning.
What's a realistic interest rate to use?
Interest rates vary by investment type: savings accounts (1-3%), bonds (2-5%), stocks (7-10% historical average), and high-risk investments (10%+). Use realistic rates for your planning.
Important Disclaimer
For informational purposes only: This calculator provides estimates and should not be considered as professional advice.
Financial disclaimer: Calculations are estimates and may not reflect actual financial products or market conditions. Consult financial advisors for investment and lending decisions.
Accuracy: While we strive for accuracy, users should verify results independently for critical decisions.