Calculate future value and total returns of compound interest investments
Principal ($)
Annual Rate (%)
Investment Years
Compounding
Result
Step-by-Step Derivation
Compound Interest Formula
Future Value FV = P × (1 + r/n)^(n×t)
Total Return = FV - P
Compound interest: the "eighth wonder of the world." Time is compound interest\u2019s best friend.
⚠Compound interest assumes stable returns; actual investments fluctuate. Results exclude taxes and fees.
What Is Compound Interest?
Compound interest means each period\u2019s earnings are added to the principal and earn interest themselves\u2014\u201cinterest on interest.\u201d Time is its greatest ally.
Formula
FV=P×(1+r/n)^(n×t). Higher frequency = larger future value.
Rule of 72
72/annual return ≈ doubling years. Quick mental estimate for investment growth.
Compound vs Simple
Simple = linear growth, compound = exponential growth. The gap widens dramatically over time.
Start Early
Starting at 25 vs 35 can double your final nest egg. Time is your biggest advantage.
Teaching Example: $100K at 8%, monthly compounding, 10 years. FV=$100K×(1+0.08/12)^120≈$222K. Total return $122K.
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