Compound Interest Formula & Calculator - Complete Guide

The Compound Interest Formula

Compound interest is calculated using: A = P(1 + r/n)^(nt)

• A = Final amount
• P = Principal (initial investment)
• r = Annual interest rate (decimal)
• n = Number of times compounded per year
• t = Number of years

Example Calculation

$10,000 invested at 8% annual interest, compounded monthly, for 10 years:

A = 10000(1 + 0.08/12)^(12×10) = 10000(1.00667)^120 = $22,196.40

You earned $12,196.40 in interest on a $10,000 investment!

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Use our Compound Interest Calculator to calculate returns with different compounding frequencies and see year-by-year breakdowns.

Compounding Frequency Matters

Monthly compounding earns more than annual compounding because interest starts earning interest sooner. Daily compounding earns slightly more than monthly.