Does compounding frequency matter much?

Less than people expect. At 7%, moving from annual to monthly compounding raises the effective rate from 7.00% to about 7.23%. The rate and the time horizon matter far more.

What is the rule of 72?

Divide 72 by the annual rate to approximate the years needed to double your money. At 7%, that is about 10.3 years — close to the exact 10.24.

Does this account for inflation or tax?

No. To see the result in today's money, enter a real rate — your expected return minus expected inflation.

Compound Interest Calculator

Compound interest pays interest on your interest. Over long periods it is the single biggest driver of investment growth — and the reason credit card balances escalate so quickly.

Fill in the fields above and select Calculate to see your result and the full working.

Please note: Financial calculators produce estimates using the figures you enter. They exclude fees, taxes, insurance and rate changes unless a field asks for them. They are not financial advice — confirm any significant decision with a qualified adviser or your lender.

Formula used

A = P(1 + r/n)^(n·t), plus the future value of any regular deposits

P is the starting amount, r the annual rate as a decimal, n the compounding periods per year and t the number of years.

How to use this calculator

Enter your starting balance and the annual interest rate.
Set how many years the money will stay invested.
Choose how often interest compounds — monthly is typical for savings accounts, annually for many bonds.
Optionally add a regular monthly deposit to model ongoing saving.

Example calculation

$10,000 at 7% compounded monthly for 20 years, plus $200 a month:

Starting amount grows to 10,000 × (1 + 0.07/12)^240 = $40,387

The $200 monthly deposits add roughly $104,200

Final balance ≈ $144,600 from $58,000 contributed.

What does this result mean?

The gap between total contributed and final balance is the work compounding did for you. That gap grows non-linearly: most of the total return on a 30-year investment arrives in the final decade, which is why starting early beats contributing more later. The same maths runs in reverse on debt — a credit card compounding monthly at 22% doubles a balance in a little over three years if nothing is repaid.

Frequently asked questions

Does compounding frequency matter much?: Less than people expect. At 7%, moving from annual to monthly compounding raises the effective rate from 7.00% to about 7.23%. The rate and the time horizon matter far more.
What is the rule of 72?: Divide 72 by the annual rate to approximate the years needed to double your money. At 7%, that is about 10.3 years — close to the exact 10.24.
Does this account for inflation or tax?: No. To see the result in today's money, enter a real rate — your expected return minus expected inflation.

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