Compound Interest Calculator - Calculator

Compound Interest Calculator helps you calculate the profit and final amount based on compound interest on the principal.

Principal ($)* Annual Interest Rate (%)* Period*

Compound Interest

Compound interest is when the interest earned on the principal also earns interest over time. In other words, (Principal + Interest) + Interest = compound effect, where assets grow exponentially over time. Compound interest has the characteristic of growing assets over time, like a snowball rolling and growing larger.

Example

Assuming an investment principal of $1,000,000 and a 10% daily interest rate:

Day 1: 1,000,000 × 0.1 = 100,000 (profit) → Total amount = 1,100,000
Day 2: 1,100,000 × 0.1 = 110,000 (profit) → Total amount = 1,210,000
Day 3: 1,210,000 × 0.1 = 121,000 (profit) → Total amount = 1,331,000

Difference Between Compound and Simple Interest

Compound interest adds interest to both the principal and previously earned interest. On the other hand, simple interest is calculated only on the principal, leading to the same interest every year.

Compound Interest Example

Calculating $1,000,000 with a 5% annual interest rate for 3 years:

After 1 year: 1,000,000 + 50,000 = 1,050,000
After 2 years: 1,050,000 + 5% = 1,102,500
After 3 years: 1,102,500 + 5% = 1,157,625

The final amount is $1,157,625.

Simple Interest Example

Calculating $1,000,000 with a 5% annual interest rate for 3 years:

After 1 year: 1,000,000 + 50,000 = 1,050,000
After 2 years: 1,050,000 + 50,000 = 1,100,000
After 3 years: 1,100,000 + 50,000 = 1,150,000

The final amount is $1,150,000.

Rule of 72

This rule helps calculate the time it takes for an asset to double using compound interest. Simply divide the interest rate by 72. For example, if you invest $100,000,000 at an annual interest rate of 5%:

72 / 5 = 14.4 years for the asset to double