# Compound Interest Calculator

Use my popular calculators to work out the **compound interest on your savings**, with monthly interest breakdowns and the option
to include regular monthly deposits or withdrawals (for retirement calculations, etc). Use the second calculator to work out interest on a simple lump
sum savings amount. You can find out the formula for compound interest here.

#### Disclaimer

Whilst every effort has been made in building these compound interest calculators, we are not to be held liable for any special, incidental, indirect or consequential damages or monetary losses of any kind arising out of or in connection with the use of the calculator tools and information derived from the web site. These tools are here purely as a service to you, please use them at your own risk.

The calculations given by the compound interest calculators are only a guide. Please speak to an independent financial advisor for professional guidance. Read the full disclaimer.

## Compound interest calculator - FAQ

### What is compound interest?

Compound interest is the concept of adding accumulated interest back to the principal sum, so that interest is earned on top of interest from that moment on. The act of declaring interest to be principal is called compounding. Should you wish to work the interest due on a loan, you can use the loan calculator.

Financials institutions vary in terms of their compounding rates - daily, monthly, yearly, etc. As a simple example, a savings account with $1000 principal and 10% interest per year (compounded yearly) would have a balance of $1100 at the end of the first year. By the end of the second year, the $1100 amount would have received 10% more, making $1210... and so on. You can learn more about compound interest here.

### Daily, monthly or yearly compounding calculations

Our compound interest calculator allows you to compound interest on either a **daily, monthly, quarterly, half yearly or yearly** basis. Your savings account may vary on
this, so you may wish to check with your bank or financial institution to find out which frequency they compound the interest on your savings.

### When is interest compounded?

With savings accounts, interest can be calculated at either the start or the end of the compounding period (month or year). With my savings calculators, additions are made at the start of each compounding period.

### What is the effective annual rate?

The effective annual rate is the rate that actually gets paid after all of the compounding. When compounding of interest takes place, **the effective annual rate becomes higher
than the overall interest rate**. The more times the interest is compounded within the year, the higher the effective annual rate will be. More information on
effective annual interest rate can be found in this article from Investopedia.

### What is the formula for compound interest?

**Annual Compound Interest Formula:**

V = P(1+r/n)^{(nt)}

The popular formula for calculating annual compound interest is **V = P(1+r/n) ^{(nt)}**

V = the future value of the investment

P = the principal investment amount

r = the annual interest rate

n = the number of times that interest is compounded per year

t = the number of years the money is invested for