Compound interest calculator

Project your investment growth and future value with this compound interest calculator. Enter your principal, regular contributions, interest rate, and compounding frequency to see total interest earned, effective annual rate, doubling time, and more.

Total value in 10 years
$100,483.07
Interest earned
$50,483.07
Avg. monthly interest

The average amount of interest earned per month over your investment period. Each month earns slightly more than the last as your balance grows — this figure is the simple average across all months.

$420.69
Avg. annual interest

Your average yearly interest earnings over the investment period. Useful for annual budgeting or comparing against other yearly return benchmarks.

$5,048.31

Your compound interest results

Final balance

Your initial investment of $50,000 plus all interest earned over 10 years. This is the total amount you would have in your account at the end of the investment period.

$100,483.07
Interest earned

The total interest earned over 10 years. Calculated as the final balance minus your initial investment.

$50,483.07
Return on principal

The total interest earned expressed as a percentage of your total principal — your initial investment of $50,000. Note that the donut chart shows interest as a percentage of the final balance (principal + interest), which will always be a lower percentage.

100.97%
Effective annual rate

The true annual return after accounting for compounding. With monthly compounding at a 7.00% nominal rate, your money actually grows by 7.229% per year. The more frequently interest compounds, the higher the effective rate relative to the nominal rate.

7.229%
Doubling time

How long it takes for your investment to double at a 7.00% nominal rate compounded monthly. Calculated using the exact formula: ln(2) ÷ ln(1 + EAR). The Rule of 72 gives a quick approximation - divide 72 by the interest rate, but this calculator uses the precise figure.

9.93 years

Month-by-month investment growth

How this compound interest calculator works

The compound interest calculator helps you estimate how your money grows over time using the power of compounding. Enter your principal, annual interest rate, compounding frequency — daily, monthly, quarterly, or annually — and time period to instantly see your total investment value and total interest earned. This makes it easy to compare different scenarios and understand how compounding frequency and time horizon affect your long-term returns.

Unlike simple interest, compound interest earns returns on both your original principal and the interest already accumulated. The longer your investment period, the more dramatic the effect. This calculator is useful for projecting growth on savings accounts, GICs, TFSAs, and other fixed-income investments where the interest rate and compounding period are known. To determine how much you have available to invest each month, our after-tax income calculator can help you estimate your Ontario take-home pay after taxes and deductions.

Use the year-by-year breakdown to track exactly how your balance grows each period, and see the accelerating effect of compounding in action. Whether you are planning long-term savings, comparing investment options, or simply learning how compound interest works, this tool gives you a clear and accurate picture of your potential returns. If you're carrying debt, our loan payment calculator can help you compare the cost of that debt against the potential returns from investing.

Compound interest FAQs

How is compound interest calculated?

Fundamentally, compound interest means that your money doesn't just earn interest on the amount you originally deposited; it also earns interest on the interest that has already been earned. In essence, the accumulated profits are added back to the original principal, creating a larger base for future interest calculations.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal, so your returns stay flat over time. Compound interest, on the other hand, earns returns on both your principal and the interest already accumulated, meaning your balance grows faster the longer you stay invested. For long-term savings and investments, compound interest produces significantly higher returns than simple interest at the same rate.

How often should interest be compounded for maximum returns?

The more frequently interest is compounded, the higher your total return at the same annual rate. Daily compounding produces slightly more than monthly, which produces more than quarterly or annually. In practice, the difference between daily and monthly compounding is small, but choosing a higher compounding frequency — where available — will always work in your favour over long time horizons.

What is the difference between a lump sum investment and regular periodic contributions?

While both utilize compound interest, contributing regularly (often called an annuity or SIP — Systematic Investment Plan) allows you to average out your purchase price over time. This strategy helps mitigate the risk of investing all your money right before a market downturn. Consistency is key to maximizing compounding returns.

How does inflation affect my compound interest gains?

Inflation erodes purchasing power, meaning that while your investment account balance grows (the nominal return), the real value of that money decreases over time. To maintain your lifestyle or desired spending level, your compounded rate of return must outpace the current inflation rate.

How does my time horizon affect compounding returns?

The longer your time horizon, the further into the future you plan to withdraw funds, the greater the benefit of compound interest. Because more time means more periods for gains to earn interest, early investment allows the "exponential curve" of compounding to do its most dramatic work.

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