Overview

The Compound Interest Calculator shows how your money grows when interest is reinvested. Enter the principal, annual rate, investment period, and compounding frequency to see the final amount and total interest earned.

Formula

Final Amount = Principal × (1 + r/n)^(n×t), where r = annual rate, n = compounding frequency per year, t = years. Total Interest = Final Amount - Principal. For continuous compounding: Final = Principal × e^(r×t).

How to Use

1. 1Enter the initial principal amount.
2. 2Enter the annual interest rate (%).
3. 3Set the investment period in years.
4. 4Select the compounding frequency (monthly, quarterly, annually, etc.).
5. 5Click Calculate to view the final amount and interest earned.

Examples

Background

The concept of compound interest was formalized in European banking during the 17th century and is famously attributed to Einstein as the 'eighth wonder of the world.' Compound interest adds earned interest to the principal, which then earns interest itself in subsequent periods, creating exponential growth over time. Compared to simple interest, the difference becomes dramatically larger with longer investment horizons. In Korea, compound interest applies to various financial products including savings accounts, funds, and pension plans, making it a cornerstone of long-term wealth-building strategies.

Tips

• ✔More frequent compounding (monthly > quarterly > annually) yields slightly higher returns.
• ✔Rule of 72: Divide 72 by the annual rate to estimate years to double your money.
• ✔Starting early maximizes the power of compounding — even small amounts grow significantly over time.

FAQ