compound interest calculator

Shawn Plummer

CEO, The Annuity Expert

Ever wonder how much interest you will earn? A compound interest calculator is a powerful tool for anyone who wants to save money and calculate compound interest. This tool will teach you how to calculate and use one to make your money work better. We’ll also explore the benefits of a compound interest rate, including its long-term effect on your savings account or investment portfolio.

Compounding Interest Calculator

How much interest will I pay or earn? Our Calculator uses compound interest calculations on future values and includes several compounding periods, including annual, quarterly, semi-annually, monthly, weekly, and daily, to solve the total interest on your investment.

Earn The Highest Interest Rates On Savings Today

Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.

TermInsurance CompanyAPY
N/ACloudBank Savings Account5.05%
N/APonce Bank5.05%
12 MonthsBread Savings CD5.20%
24 MonthsIdabel National Bank5.05%
48 MonthsAmerico Fixed Annuity5.05%
5 YearsAmerico Fixed Annuity5.25%
10 YearsAmerican National5.45%
*Fixed annuities are only for saving money to use in retirement.

Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this article.

Find And Compare The Highest Interest Rates

Find the highest interest rates for your savings ranging from 3 months to 10 years, all in one place.

The Power Of Compounding

Learn how interest is calculated and the power of calculating compound interest over time for retirement.

To calculate the compound interest formula for:

  • Daily Interest Rate: Ending Investment = Start Amount * (1 + Interest Rate) ^ n
    • To calculate daily compound interest, the interest rate will be divided by 365 and the number of years (n) multiplied by 365.
  • Compounded Monthly: CI = P(1 + (r/12) )12t – P
    • P is the principal amount
    • r is the interest rate in decimal form
    • t is the time

What Is Compound Interest?

The compound interest definition is earning interest on your original money and the money you save. Because interest compounds, the accrued interest allows your savings to grow faster.

Calculating interest on a savings account that pays compound interest, the return gets added to the original principal at the end of every compound period. The larger balance earns more interest, which leads to higher yields. The period can be daily or monthly, depending on the account.

There are many different places you can save your money with various compounding periods. For example, you could save it in a savings account, a Roth IRA, or a traditional IRA. You could also save it in a certificate of deposit (CD).

Compound Interest Calculator (2023)

Why Use A Compound Interest Calculator

Using a compound interest calculator can be beneficial for various reasons. Here are some key advantages of using a compound interest calculator:

  • Accurate calculations: Compound interest involves compounding interest over time, which can become complex to calculate manually. A compound interest calculator uses specific formulas and algorithms to ensure accurate and precise calculations, saving time and effort.
  • Financial planning: Whether you’re saving money, investing, or taking out loans, understanding the impact of compound interest on your finances is crucial. A compound interest calculator helps you plan and make informed decisions by providing detailed information about the growth or cost of your investments or debts over time.
  • Comparing investment options: If you’re considering different investment opportunities, a compound interest calculator can help you compare the potential returns of each option. By inputting the initial investment, interest rate, and time period, you can determine which investment has the potential to generate higher returns.
  • Goal setting: Planning for future financial goals requires understanding the growth potential of your savings or investments. A compound interest calculator lets you set realistic targets and track progress. It helps you determine how much to save or invest regularly to reach a specific target amount within a given timeframe.
  • Making informed financial decisions: Using a compound interest calculator, you can evaluate the long-term impact of different financial decisions. For example, you can assess the advantages of saving or investing early versus delaying it or the cost of borrowing money with different interest rates and repayment periods.
  • Educational purposes: Compound interest calculators are valuable educational tools. They help individuals, students, and professionals understand the concept of compound interest and its effects on finances. By experimenting with different inputs and scenarios, users can gain a deeper understanding of the power of compounding.
What Is Compound Interest

Compound Interest Formula

Compound interest formulas are the interest rate you earn on your money during a compounding period in a financial institution or insurance company savings account. When there’s compound interest, the money you earn each year is added to the money you already have. So, instead of just growing, the accumulated interest grows at an increasing rate which helps save for retirement or invest in stocks. Compound interest also accounts for the effects of inflation and repaying debt. When calculating interest, interest compounding grows faster than at a simple interest rate.

Helpful Tool: Simple Interest Calculator

What Is The Compounded Annual Formula?

The compounded annual formula is used to calculate the interest that is earned on an investment over some time. This formula considers the effects of compounding, which is when interest is earned on both the principal amount invested and any interest earned previously. The compounded annual formula can be used for investments such as savings accounts, bonds, and stocks.

To calculate the compounded annually formula, you will need to know the following information:

  • The principal amount invested
  • The interest rate
  • The number of years the investment will be held

Here is the formula:

F = P(1 + i)^n


  • F = Future value of an investment
  • P = Present value of an investment
  • i = Interest rate (expressed as a decimal)
  • n = Number of years the investment will be held

For example, if you invest $1,000 at an interest rate of 5% for ten years, the future value of your investment would be:

F = 1000(1 + 0.05)^10

F = $1,627.28

Compound Interest Investments

When you invest in the stock market, you don’t earn an annual interest rate like you would with a savings account. Instead, you get a return based on how much your investment changes in value. If the value goes up, you make money. If it goes down, you lose money.

With that said, if you leave your money in the market, the returns you earn will be compounded over time, increasing your future value.

If you save and invest over a long period, compounding can help you reach your financial goals. You will earn more money on your initial balance than you started.

Manage Simple Interest And Compounding Interest Accounts

Investment Accounts That Compound Interest

The following savings plans offer compound growth at a daily, monthly, or annual rate:

Accounts That Charge Compound Interest

The following lines of credit charge compound interest:

  • Mortgage
  • Home equity loans
  • Auto loan
  • Student loan
  • A personal loan from a bank or credit union
  • Small business loan
  • Credit card accounts

Triple Compounding: The Power of Tax-Deferral

Now that you understand how compound interest grows, learn how to speed up your savings account’s compound annual growth rate. Here’s how triple compounding with tax-deferred growth works with savings accounts:

  • First, the initial investment earns compounding interest on your principal.
  • Second, the principal amount then earns compounded interest on your interest earned.
  • Finally, the initial principal earns interest on the money you usually lose to taxes.

Your annual interest rate compounds faster than any bank account, including savings, money market accounts, and CDs.

Compounding Interest Calculator

Next Steps

If you want to know how much interest your investment will earn, our compound interest calculator can help. The Calculator uses compound interest calculations on future values and includes several compounding periods, including annual, semi-annually, monthly, weekly, and daily, to solve the total interest on your investment. Contact us today to request a service quote or learn more about our products and solutions.

Compound Interest Calculator

Compound Interest Quotes

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Frequently Asked Questions

How much interest do 2 million dollars earn?

Using our compound interest calculator, $2,000,000 invested can earn up to $335,480 in interest over five years. The interest is determined by the premium amount, the annuity’s term, and income withdrawn.

How much interest do 5 million dollars earn per year?

Using our compound interest calculator, $5,000,000 invested in a fixed deferred annuity can earn up to $167,740 per year in interest over five years. The interest is determined by the premium amount, the annuity’s term, and income withdrawn.

What is the yearly interest on 10 million dollars?

Using our compound interest calculator, $10,000,000 invested in a fixed deferred annuity can earn up to $335,480 per year in interest over five years. The interest is determined by the premium amount, the annuity’s term, and income withdrawn.

How much interest do 20 million dollars earn?

Using our compound interest calculator, $20,000,000 invested in a fixed deferred annuity can earn up to $3,354,800 in interest over five years. The interest is determined by the premium amount, the annuity’s term, and income withdrawn.

How much interest will I earn per month?

Assuming you’re asking how much interest you’ll earn on your savings account balance, the answer depends on the account’s interest rate and how much money is in the account. For example, if you have a savings account with a $10,000 balance and an interest rate of 1%, you’ll earn $100 in interest each month.

How do you manually calculate compound interest?

Assuming you would like a formula for calculating compound interest:
A = P(1 + r/n)^nt

P = principal amount (the initial amount you borrow or deposit)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number

How much is $1000 worth at the end of 2 years if the interest rate of 6% is compounded daily?

The future balance of $1,000 will be worth $1,127.49 after two years if the compounding period is daily.

What will 100k be worth in 20 years?

If the nominal annual interest rate is 4%, a beginning balance of $100,000 will be worth $219,112.31 after twenty years if compounded annually.

What is the future value of $1,000 after five years at 8% per year?

If compounding monthly, $1,489.85 is the total compound interest value after five years.

How do you compound interest monthly?

CI = P(1 + (r/12) )12t – P is the formula of monthly compound interest where P is the principal amount, r is the interest rate in decimal form, and t is the time.

How do I get compound interest?

To calculate compound interest, start by multiplying the initial amount by one plus the annual interest rate by the power of the number of compound periods minus one. Finally, subtract the original amount of the loan from this total value. Katie Kerpel provides this information from Investopedia, 2019.

Do banks offer compound interest?

For an excellent savings account, look for one at a bank that compounds interest daily and doesn’t charge monthly fees. Remember that banks usually express their interest rates as an annual percentage yield (APY) to account for the compounding effect.

What is the power of compound interest?

The power of compound interest lies in its ability to generate exponential growth over time by reinvesting earnings, leading to significant wealth accumulation and long-term financial advantages.

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*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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