What Is Compound Interest?
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest grows your money exponentially — the more frequently interest compounds, the faster your investment grows.
How to Use This Calculator
- Enter your initial investment — the starting amount you have today
- Set the annual interest rate — the expected yearly return (e.g. 5% for a savings account, 7-10% for stock market averages)
- Choose the time period — how many years you plan to save or invest
- Select compounding frequency — how often interest is calculated (monthly is most common for savings accounts)
- Add monthly contributions — any regular amount you plan to add each month
Understanding the Results
- Final Balance — your total money at the end of the period
- Total Contributions — the actual money you put in (principal + monthly contributions)
- Interest Earned — the "free money" compound interest generated for you
Use Cases
- Savings accounts: See how your emergency fund or savings will grow over time
- Retirement planning: Estimate your RRSP or TFSA growth with regular contributions
- Investment returns: Compare different rates and contribution strategies
- Debt impact: Understand how compound interest works against you on loans (use the same formula in reverse)
- Education savings: Plan your RESP contributions for your children's future
Privacy
All calculations happen directly in your browser — we never send your financial data to any server. Your information stays on your device.