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Compound Interest Calculator
Growth of a lump sum at any compounding frequency, with optional annual additions.
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Result
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Compounding is interest earning interest. Over short periods it barely registers; over long ones it dominates everything else.
Frequency matters
The same nominal rate compounded monthly beats the same rate compounded annually, and the gap widens with time. This is why the effective annual rate, not the headline rate, is the figure to compare across products.
Simple versus compound
The calculator shows both. At 8% over ten years, compounding adds roughly 16% more than simple interest on the same principal. At 25 years the difference is larger than the original investment.
It works against you too
A credit card compounds monthly at around 3.5%. The same mechanism that builds a corpus over twenty years builds a debt in two.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus accumulated interest, so the base grows every period. Over long horizons the difference exceeds the original investment.
Does compounding frequency matter?
Yes. The same nominal rate compounded monthly beats the same rate compounded annually, and the gap widens with time. Compare the effective annual rate rather than the headline rate when choosing between products.
How long does money take to double?
Divide 72 by the annual rate for a close approximation. At 8% that is about nine years; at 12%, six.
Does compounding work against me too?
Credit cards compound monthly at around 3.5%. The same mechanism that builds a corpus over twenty years builds an unmanageable debt in two.