Compound Interest Calculator
Calculate compound interest with regular contributions. See how your savings grow over time with the power of compounding. Includes tax and inflation adjustments.
Investment Details
Interest Breakdown
Ending Balance Breakdown
Principal vs Interest Growth
Year-by-Year Breakdown
Accumulation Schedule
| Year | Deposit | Interest | Ending Balance |
|---|---|---|---|
| 0 | $20,000.00 | $0.00 | $20,000.00 |
| 1 | $5,000.00 | $1,025.35 | $26,025.35 |
| 2 | $5,000.00 | $1,334.25 | $32,359.60 |
| 3 | $5,000.00 | $1,659.00 | $39,018.60 |
| 4 | $5,000.00 | $2,000.39 | $46,018.99 |
| 5 | $5,000.00 | $2,359.28 | $53,378.26 |
How Compound Interest Works
Understanding Compound Interest
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. This means your money grows faster over time because you earn interest on your interest.
Where:
A = Final amount
P = Principal (initial deposit)
r = Annual interest rate
n = Compounding frequency (daily=365, monthly=12, quarterly=4, annually=1)
t = Time in years
PMT = Regular contributions
Contribution Timing Matters
Contributions made at the beginning of each period earn more interest than contributions made at the end because they have more time to compound. This difference becomes more significant over longer time periods.
The Power of Compounding Frequency
More frequent compounding (daily or monthly) yields higher returns than less frequent compounding (quarterly or annually). Daily compounding typically provides the highest returns.
Understanding Tax and Inflation
Tax Impact
Investment earnings are typically subject to taxes. Our calculator shows you both gross and after-tax returns so you can plan accordingly.
After-tax balance: Your actual take-home amount after taxes are deducted from interest earnings.
Inflation Impact
Inflation erodes your purchasing power over time. A dollar today is worth more than a dollar in the future.
Real value: Your inflation-adjusted balance showing actual purchasing power. This helps you understand if your investment is truly growing in real terms.
Interest Breakdown
Our calculator breaks down interest into two components:
Interest on Initial Investment
The interest earned solely on your initial principal amount. This grows exponentially over time.
Interest on Contributions
The interest earned on your regular contributions. Each contribution compounds from the time it's made.