How to use it
- Enter the starting amount and leave the contribution at 0 for a pure lump-sum calculation.
- Enter the annual rate and the number of years.
- Change the compounding frequency to see how much difference it makes to the final balance and effective annual rate.
The formula
A = P × (1 + r ÷ n)^(n × t)
P is the starting amount, r the annual rate, n compounding periods per year and t the number of years. With deposits added, the calculator applies the same growth month by month.
Worked example
10,000 at 5% a year, compounded yearly, for 10 years.
A = 10,000 × 1.05¹⁰ = 16,288.95.
Compounded monthly instead, the same deposit reaches about 16,470.09.
Assumptions
- The rate is fixed for the whole period.
- No withdrawals, taxes or fees.
Common mistakes
- Comparing two offers by their nominal rate when they compound differently. Compare the effective annual rate instead.
- Entering a monthly rate in the annual rate field.
Questions
What is the "rule of 72"?
A shortcut: divide 72 by the annual rate to estimate the years needed to double your money. At 6%, about 12 years. Use the calculator for the exact figure.
Simple vs compound interest?
Simple interest is paid only on the original amount. Compound interest is also paid on interest already earned, so the balance grows faster each year.
Estimates only. Your actual figures depend on the provider’s terms.