This compound interest calculator has more features than most. You can vary both the deposit intervals and the compounding intervals from daily to annually (and everything in between).

This flexibility allows you to calculate and compare the expected interest earnings on various investment scenarios so that you know if an 8% return, compounded daily is better than a 9% return, compounded annually.

It's simple to use. Just enter your beginning balance, the regular deposit amount at any specified interval, the interest rate, compounding interval, and the number of years you expect to allow your investment to grow.

Please treat the results from these calculations as estimates only. Varying deposit and compounding intervals results in very complex equations. Actual investment results may vary.

Additionally, if you would like to factor in inflation and taxes to determine real compound return try this future value calculator here.

If this free calculator helps you then please give a like, tweet, or +1 to support our effort. Thanks for helping out!

**How Compound Interest Works**

Compound interest has *dramatic* positive effects on investments. Here is what you need to know . . . .

Compound interest occurs when interest is added to the original deposit – or principal – which results in interest earning interest. Financial institutions often offer compound interest on deposits, compounding on a regular basis – usually monthly or annually.

The compounding of interest grows your investment without any further deposits, although you may certainly choose to make more deposits over time – increasing efficacy of compound interest.

## Simple Vs. Compound Interest

Simple interest differs from compound interest in that interest in this case is not added to the principal balance. Simple interest offers no compounding – the interest does not make interest. It is possible, however, to immediately reinvest earned interest to effectively create compound interest.

Compound interest benefits investors, on the other hand, by automatically applying earned interest to the principal. No extra effort is needed by investors for compounding to occur.

## How To Take Advantage Of Compound Interest

**Invest early –**As with any investment, the earlier one starts investing, the better. Compounding further benefits investors by earning money on interest earned.**Invest often –**Those who invest what they can, when they can, will have higher returns. For example, investing on a monthly basis instead of on a quarterly basis results in more interest.**Hold as long as possible –**The longer you hold an investment, the more time compound interest has to earn interest on interest.**Consider interest rates –**When choosing an investment, interest rates matter. The higher the annual interest rate, the better the return.**Don’t forget compounding intervals –**The more frequently investments are compounded, the higher the interest accrued. It is important to keep this in mind when choosing between investment products.

## Comparing Investments – Importance Of Compounding Intervals

By using the Compound Interest Calculator, you can compare two completely different investments. However, it is important to understand the effects of changing just one variable.

Consider, for example, compounding intervals. Compounding intervals can easily be overlooked when making investment decisions. Look at these two investments:

**Investment A**

Beginning Account Balance: $1,000.00

Monthly Addition: $0.00

Annual Interest Rate (%): 8

Compounding Interval: Daily

Number of Years to Grow: 40

*Future Value: $24,518.56*

**Investment B**

Beginning Account Balance: $1,000.00

Monthly Addition: $0.00

Annual Interest Rate (%): 8

Compounding Interval: Annual

Number of Years to Grow: 40

*Future Value: $21,724.52*

Notice that the only variable difference here is the compounding interval. *Investment A* wins over *Investment B* by $2,794.04. Remember, compounding intervals matter.

## Compound Interest Formula

The Compound Interest Calculator is an easy way to calculate compound interest. Alternatively, it is possible to use a compound interest formula on your own. Reviewing this formula will also help you achieve a better understanding of how compound interest works.

Here is one formula for finding the results of annual compound interest:

**A = P ( 1 + r / n ) ^nt**

A = value after t periods

P = principal amount (initial investment)

r = annual nominal interest rate (not reflecting the compounding)

n = number of times the interest is compounded per year

t = number of years the money is borrowed for

By understanding the importance of compound interest and choosing appropriate investments, you can achieve higher returns. All of these compound interest formula variables combine to accelerate wealth-building.

## Compound Interest Calculator Terms & Definitions

**Beginning Account Balance –**The money you already have saved that will be applied toward your savings goal.**______ Addition ($)**– How much money you’re planning on depositing daily, weekly, bi-weekly, half-monthly, monthly, bi-monthly, quarterly, semi-annually, or annually over the number of years to grow.**Annual Interest Rate (ROI) –**The annual percentage interest rate your money earns if deposited.**Choose Your Compounding Interval –**How often a particular investment compounds.**Number of Years to Grow –**The number of years the investment will be held.**Future Value**– The value of your account, including interest earned, after the number of years to grow.**Total Deposits –**The total number of deposits made into the investment over the number of years to grow.**Interest Earned –**How much interest was earned over the number of years to grow.

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