📈 Compound Interest Calculator

Understanding Compound Interest

Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Often called "interest on interest," it makes your money grow exponentially over time — a concept Albert Einstein allegedly called the "eighth wonder of the world."

The Power of Compounding

The more frequently interest is compounded, the faster your money grows. Monthly compounding yields more than annual compounding, and daily compounding yields even more. The formula used is: A = P(1 + r/n)^(nt), where A is the future value, P is principal, r is annual rate, n is compounding frequency, and t is time in years.

Compound Interest vs Simple Interest

Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus any previously earned interest. Over long periods, compound interest generates significantly more returns, which is why starting to invest early is so powerful.