Understanding Compound Interest

Compound interest is the interest you earn on both your original investment (the principal) and on the accumulated interest from previous periods. Often called "interest on interest," it is the foundation of long-term wealth creation.

Why Use This Calculator?

This tool helps you visualize how your investments can grow exponentially over time. Use it to plan for long-term goals like retirement, a child's education, or simply to see how different interest rates and time horizons can impact your final amount.

The Formula

The calculation is based on the standard compound interest formula:

• A = the future value of the investment/loan, including interest.
• P = the principal investment amount (the initial deposit).
• r = the annual interest rate (in decimal form).
• n = the number of times that interest is compounded per year.
• t = the number of years the money is invested for.