Compound Interest Calculator

How to Calculate Compound Interest

Compound interest is one of the strongest forms of interest known to man. Calculating it can be done with the following variables:

1. Initial investment


2. Rate of return


3. Duration (in years)


4. Monthly contributions (optional)

• FV = Final value


• I = Initial investment


• AIR = Annual interest rate


• N = 12


• MC = Monthly contributions


• T = Number of years

Understanding Your Results

Your results will outline what the final value of your investment will be after the time has passed. It will also tell you the total amount of money that you have invested into it so you know how much of it is capital that you directly put into it and how much of it is growth of the account due to compounding interest. Keep in mind that your results may not be exact in scenarios when the rate of return that you entered is not guaranteed.

How to Use the Compounding Interest Tool

Knowing how much money you may make due to compounding interest is an important thing to understand. However, it can be very difficult to calculate that number. This tool makes it both easy and efficient to do so. The steps involved with using this tool include:

1. Enter the total amount initially invested.


2. Enter the annual interest rate or the estimated rate of return.


3. Enter the number of years that the account will have to grow.


4. Enter the amount of money you plan to contribute monthly through the entire length of the account.


5. Hit the calculate button and instantly get your result.

Calculation Example

Let's say we want to open a new investment account so we can put some money away for when we retire. We have a total of $71,000 that we will be initially investing. We are expecting to get a 13% return annually and we are planning on leaving the account alone for 25 years. We will also be adding $500 to the account every month for the entire length of the account. We can use this tool to calculate how much the account will be worth at the end of the duration. After entering all of the values into the proper fields you can hit calculate. We learn that the estimated final value will be $2,922,933 and of that, we would have invested $221,000 of our own money.