Compound Interest Calculator - NerdWallet (2024)

  • Try your calculations both with and without a monthly contribution — say, $5 to $200, depending on what you can afford.

  • This savings calculator includes an example rate of return. To see the annual percentage yield you can expect, compare rates on NerdWallet for thousands of savings accounts and certificates of deposit.

» Ready to begin? Start saving with some of our favorite savings accounts or IRA providers.

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A savings account is a place where you can store money securely while earning interest.

A savings account is a place where you can store money securely while earning interest.


What is compound interest?

For savers, the definition of compound interest is basic: It’s the interest you earn on both your original money and on the interest you keep accumulating. Compound interest allows your savings to grow faster over time.

In an account that pays compound interest, such as a standard savings account, the return gets added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, it results in a larger balance. With the compound interest formula, the account earns more interest in the next compounding period.

For example, if you put $10,000 into a savings account with a 4% annual yield, compounded daily, you’d earn $408 in interest the first year, $425 the second year, an extra $442 the third year and so on. After 10 years of compounding, you would have earned a total of $4,918 in interest.

But remember, that’s just an example. For longer-term savings, there are better places than savings accounts to store your money, including Roth or traditional IRAs and CDs.

Compounding investment returns

When you invest in the stock market, you don’t earn a set interest rate but rather a return based on the change in the value of your investment. When the value of your investment goes up, you earn a return.

If you leave your money and the returns you earn are invested in the market, those returns compound over time in the same way that interest is compounded.

If you invested $10,000 in a mutual fund and the fund earned a 6% return for the year, it means you gained $600, and your investment would be worth $10,600. If you got an average 6% return the following year, it means your investment would be worth $11,236.

Over the years, that money can really add up: If you kept that money in a retirement account over 30 years and earned that average 6% return, for example, your $10,000 would grow to more than $57,000.

In reality, investment returns will vary year to year and even day to day. In the short term, riskier investments such as stocks or stock mutual funds may actually lose value. But over a long time horizon, history shows that a diversified growth portfolio can return an average of 6% annually. Investment returns are typically shown at an annual rate of return.

Compounding can help fulfill your long-term savings and investment goals, especially if you have time to let it work its magic over years or decades. You can earn far more than what you started with.

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Compounding with additional contributions

As impressive as compound interest might be, progress on savings goals also depends on making steady contributions.

Let’s go back to the savings account example above and use the daily compound interest calculator to see the impact of regular contributions. We started with $10,000 and ended up with $4,918 in interest after 10 years in an account with a 4% annual yield. But by depositing an additional $100 each month into your savings account, you’d end up with $29,648 after 10 years, when compounded daily. The interest would be $7,648 on total deposits of $22,000.

Frequently asked questions

How do you calculate compound interest?

To calculate interest without a calculator, use the formula A=P(1+r/n)^nt, where:

A = ending amountP = original balancer = interest rate (as a decimal)n = number of times interest is compounded in a specific timeframet = time frame

What is the compound interest formula, with an example?

Use the formula A=P(1+r/n)^nt. For example, say you deposit $5,000 in a savings account that earns a 3% annual interest rate, and compounds monthly. You’d calculate A = $5,000(1 + 0.03/12)^(12 x 1), and your ending balance would be $5,152. So after a year, you’d have $5,152 in savings.

Compound Interest Calculator - NerdWallet (2024)


What is $15000 at 15 compounded annually for 5 years? ›

The total amount of $15,000 at 15% compounded annually for 5 years will be $30,170.36 so option (B) is correct.

How much is $1000 worth at the end of 2 years if the interest rate of 6% is compounded daily? ›

Hence, if a two-year savings account containing $1,000 pays a 6% interest rate compounded daily, it will grow to $1,127.49 at the end of two years.

How long will it take for $10000 to double at 8 compound interest? ›

For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.

How long will it take $1000 to double at 6% interest? ›

Answer and Explanation:

The answer is: 12 years.

What is the future value of $1000 after 5 years at 8% per year? ›

The future value of a $1000 investment today at 8 percent annual interest compounded semiannually for 5 years is $1,480.24. It is computed as follows: F u t u r e V a l u e = 1 , 000 ∗ ( 1 + i ) n.

How much will 10000 amount in 2 years at compound interest? ›

Calculate Rate using Rate Percent = n[ ( (A/P)^(1/nt) ) - 1] * 100. In this example we start with a principal of 10,000 with interest of 500 giving us an accrued amount of 10,500 over 2 years compounded monthly (12 times per year).

What will $1 000 be worth in 20 years? ›

As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
Discount RatePresent ValueFuture Value
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How long will it take for $5000 to accumulate to $8000 if it is invested at an interest rate of 7.5 %/ a compounded annually? ›

It will take approximately 7.9 years for the account to go from $5000 to $8000.

How long will it take to increase a $2200 investment to $10000 if the interest rate is 6.5 percent? ›

Expert-Verified Answer

It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.

What is the miracle of compound interest? ›

The concept simply involves earning a return not only on your original savings but also on the accumulated interest that you have earned on your past investment of your savings. The secret of getting rich slowly, but surely, is the miracle of compound interest.

What is $5000 invested for 10 years at 10 percent compounded annually? ›

Answer and Explanation:

The future value of the investment is $12,968.71. It is the accumulated value of investing $5,000 for 10 years at a rate of 10% compound interest.

Does 401k double every 7 years? ›

One of those tools is known as the Rule 72. For example, let's say you have saved $50,000 and your 401(k) holdings historically has a rate of return of 8%. 72 divided by 8 equals 9 years until your investment is estimated to double to $100,000.

How long will it take for you to get $100000.00 if you invest $5000.00 in an account giving you 9.7% interest compounded continuously? ›

t = ln(100,000/5,000)/0.097 ≈ 12.35 years Using the formula for continuous compounding interest, it will take approximately 12.35 years for a $5,000 investment to grow to $100,000 at an interest rate of 9.7% compounded continuously.

How much is $10000 for 5 years at 6 interest? ›

An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.

How many years would it take money to grow from $5000 to $10000 if it could earn 6% interest? ›

Final answer:

It would take approximately 11.90 years for the money to grow from $5,000 to $10,000 with a 6% interest rate.

How do you calculate compound interest for 5 years? ›

For example, if you invest Rs. 50,000 with an annual interest rate of 10% for 5 years, the returns for the first year will be 50,000 x 10/100 or Rs. 5,000. For the second year, the interest will be calculated on Rs. 50,000 + Rs. 5000 or Rs. 55,000. The interest will be Rs. 5550.

What is the interest on 15000 at a rate of interest of 5% compounded annually for 2 years? ›

=P+I=15000+1500= Rs. 16,500. Find simple interest and amount on Rs. 15000 at 5% per annum after 2 years.

How do you calculate compound interest over 5 years? ›

The formula for calculating compound interest is P = C (1 + r/n)nt – where 'C' is the initial deposit, 'r' is the interest rate, 'n' is how frequently interest is paid, 't' is how many years the money is invested and 'P' is the final value of your savings.

What is the compound interest for the second year on 15000 invested for 5 years at 6%? ›

15000= 159 x 6 = Rs. 954.

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