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Daily Compound Interest Calculator

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Thumbnail image of Alastair Hazell By Alastair Hazell. Reviewed by Chris Hindle.
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Include all days of week?
The daily reinvest rate is the % figure that you wish to keep in the investment for future compounding. As an example, you may wish to reinvest 80% of the daily earnings you receive and withdraw the other 20% in cash.
$ This option allows you to add extra deposits into the investment. Note: Deposits are currently in beta.
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$ This option allows you to withdraw additional amounts from the investment. Note: Withdrawals are currently in beta.

See how much daily compound interest or return you might receive on your investment over a fixed number of days, months and years. This is useful for calculating savings account interest, investment returns, or day trading gains.

Disclaimer: Whilst every effort has been made in building our calculator tools, we are not to be held liable for any damages or monetary losses arising out of or in connection with their use. Full disclaimer.

On this page:

What is daily compound interest?

With compound interest, the interest you have earned over a period of time is calculated and then credited back to your starting account balance. In the next compound period, interest is calculated on the total of the principal plus the previously-accumulated interest.

The more frequently that interest is calculated and credited, the quicker your account grows. The interest earned from daily compounding will therefore be higher than monthly, quarterly or yearly compounding because of the extra frequency of compounds.

You'll commonly come across daily compounding in two main scenarios:

Savings and Investments: Banks and investment accounts often compound interest daily on savings accounts, CDs, and money market accounts. With these kinds of investments, you earn interest on both your principal and previously accrued interest. 1

Trading with Margin: When trading CFDs, Forex, spread-betting, or options, daily compounding can apply to both gains and losses. If you're borrowing money (margin), you'll typically pay daily financing charges. 2 It's important to note that this is a very high-risk way of investing - you can lose more than your initial investment. 3

Please be aware that we at The Calculator Site develop tools to assist with financial calculations. However, we cannot and will not advise you where to invest your money. Instead, we recommend you speak to an independent, qualified financial advisor for guidance.

How to calculate daily compound interest

Daily compound interest is calculated using a version of the compound interest formula. To begin your calculation, take your daily interest rate and add 1 to it. Then, raise that figure to the power of the number of days you want to compound for. Finally, multiply your figure by your starting balance. Subtract the starting balance from your total if you want just the interest figure.

Note that if you wish to calculate future projections without compound interest, we have a calculator for simple interest without compounding.

Let's examine the formula in a bit more detail.

Formula for daily compound interest

The formula for calculating daily compound interest with a fixed daily interest rate is:

A = P(1+r)^t

Where:

  • A = the future value of the investment
  • P = the principal investment amount
  • r = the daily interest rate (decimal)
  • t = the number of days the money is invested for
  • ^ = ... to the power of ...

Example investment

Let's use the example of $1,000 at 0.4% daily for 365 days.

  • P = 1000
  • r = 0.4/100 = 0.004
  • t = 365

Let's put these into our formula:

A = P(1+r)^t

A = 1000(1+0.004)^365

A = 1000 * 4.2934377972993

A = 4293.4377972993

To get the total interest, we deduct the principal amount (1000) from the future value. This gives us interest of $3293.44

Daily compounding with annual interest rate

If you have an annual interest rate and want to calculate daily compound interest, the formula you need is:

A = P(1+r/365)^(365t)

Where:

  • A = the future value of the investment
  • P = the principal investment amount
  • r = the annual interest rate (decimal)
  • t = the number of years the money is invested for
  • ^ = ... to the power of ...

Including additional deposits

Making regular, additional deposits to your account has the potential to grow your balance much faster thanks to the power of compounding. Our daily compounding calculator allows you to include either daily or monthly deposits to your calculation. Note that if you include additional deposits in your calculation, they will be added at the end of each period, not the beginning.

Questions about our calculator

Here are some frequently asked questions about our daily compounding calculator.

What is the daily reinvest rate?

The daily reinvest rate is the percentage figure that you wish to keep in the investment for future days of compounding. As an example, you may wish to only reinvest 80% of the daily interest you're receiving back into the investment and withdraw the other 20% in cash.

Let's look at an example. If your initial investment is $5,000 with a 0.5% daily interest rate, your interest after the first day will be $25. If you choose an 80% daily reinvestment rate, $20 will be added to your investment balance, giving you a total of $5020 at the end of day one. The remaining $5 will be withdrawn as cash.

Excluding weekends from calculations

You may wish to only compound your money on particular days of the week. Perhaps you only trade on weekdays, or want to exclude Sundays. Our calculator gives you the option to exclude these days from your calculation, giving you extra flexibility. Here's an example:

You want to compound for one year minus weekends (net business days). This means your figure will compound for around 261 BUSINESS days, with an end date 365 days from your start date, depending on when the weekends fall.

The aim of this option is to give you maximum flexibility around how your interest is compounded and calculated, whether you're Forex trading, trading with cryptocurrencies or simply buying and selling stock assets.

And finally...

I hope you found our daily compounding calculator and article useful. At The Calculator Site we love to receive feedback from our users, so please get in contact if you have any suggestions or comments. You may also wish to check out our range of other finance calculation tools.

References

  1. Uninterrupted compound interest accounts, Finder.
  2. Using online compound interest tools to improve financial literacy, Goat Funded Trader.
  3. Basics of buying on margin: What's margin trading?, Charles Schwab.