Compound Interest Calculator

What is compound interest?

Compound interest is interest calculated on both your initial principal and the accumulated interest from previous periods. Unlike simple interest (calculated only on principal), compound interest grows exponentially over time — this is why Albert Einstein reportedly called it "the eighth wonder of the world."

How often should interest compound?

More frequent compounding means slightly more growth. Daily compounding earns marginally more than monthly, which earns more than annual. For most savings accounts, the difference between daily and monthly compounding is small. The interest rate matters far more than compounding frequency.

What is the Rule of 72?

The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate. At 6% interest, your money doubles in 72/6 = 12 years. At 8%, it doubles in 9 years. This rule works for any compounding investment.

Should I use a high-yield savings account or invest in the stock market?

High-yield savings accounts (4%–5% APY) are best for emergency funds and short-term goals (under 3 years) because they're FDIC-insured with no risk. For long-term goals (5+ years), investing in diversified index funds has historically returned 7%–10% annually, significantly outpacing savings accounts despite short-term volatility.