Compound Interest Calculator

Calculate how your money grows with compound interest. Enter principal, rate, time and frequency to see your final balance, total interest and the power of compounding.

Compounding Frequency

Enter 0 for principal-only investment

How to Use

  1. Enter principal

    Input the initial investment amount.

  2. Set rate and period

    Enter the annual interest rate (%), investment period (years), and compounding frequency.

  3. View results

    See the final amount, total interest earned, and year-by-year growth chart.

What Is Compound Interest?

Compound interest is interest that is added back to the principal at the end of each period, so that the next round of interest is calculated on that larger total. In other words, it is a system where 'interest earns interest.' Because of this, your balance grows along a curve that steepens over time rather than along a straight line. Compound interest is so central to long-term wealth building that Einstein is often quoted as calling it the 'eighth wonder of the world.'

Why Compounding Matters

  • Time is return: Even at the same rate, starting one or two years earlier creates a dramatic gap by the end.
  • Reinvestment required: Compounding only works if you reinvest the interest and dividends you receive instead of spending them.
  • A double-edged sword: It works in your favor with savings and index investing, but it snowballs your debt with credit card revolving balances and overdue loan interest.

In practice, most long-term financial products — savings accounts, dividend reinvestment in funds and ETFs, pensions, and more — are designed around compounding.

The Formula

The final compound amount is calculated with the following equation.

A = P × (1 + r / n)^(n × t)

  • A: Final amount
  • P: Initial principal
  • r: Annual interest rate (decimal, 5% = 0.05)
  • n: Compounding frequency per year (annually 1, monthly 12, daily 365)
  • t: Investment period (years)

Example: Investing ₩10,000,000 at 5% annually, compounded monthly (n=12) for 10 years yields
10,000,000 × (1 + 0.05/12)^(12×10) ≈ ₩16,470,095
With simple interest (P×(1+r×t)) you would have ₩15,000,000, so compounding adds about ₩1,470,000 more.

The Rule of 72: Time for principal to double ≈ 72 ÷ rate(%). At 6% per year, 72÷6 = about 12 years.

Frequently Asked Questions

What is compound interest?
Compound interest is interest that accrues not only on the principal but also on the interest earned in previous periods. The phrase 'interest earning interest' captures it best, and because the effect grows the longer you stay invested, it is often called the 'magic of compounding.'
What is the difference between simple and compound interest?
Simple interest is charged only on the principal, while compound interest is charged on the principal plus all the interest accumulated so far. For example, ₩10,000,000 left at 5% per year for 10 years becomes ₩15,000,000 with simple interest but about ₩16,470,000 with monthly compounding. The longer the period and the higher the rate, the more the gap widens exponentially.
What is the compound interest formula?
It is A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate (as a decimal), n is the number of compounding periods per year, and t is the time in years. If there are monthly contributions, each deposit is compounded separately over its remaining time and then summed.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut for estimating how long it takes an investment to double: just divide 72 by the annual rate (%). For example, at 6% it takes 72÷6 = about 12 years, and at 9% about 8 years. It is most accurate for rates in the 6–10% range.
How do different compounding frequencies (daily/monthly/quarterly/annually) differ?
The shorter the compounding interval, the more often interest is added to the principal, so the final amount is slightly larger. The favorable order is daily > monthly > quarterly > annually, but at the same annual rate the difference is usually only a few percent. As you divide the interval infinitely, it converges to continuous compounding (A = Pe^rt).
Are regular contributions (recurring deposits) also calculated with compounding?
Yes. Besides the initial principal, this calculator lets you add a fixed monthly contribution, and each contribution is compounded from its deposit date until maturity. Over the long run, steady contributions have an enormous impact on the final amount.
Are taxes and inflation taken into account?
This calculator shows pre-tax nominal returns. In reality you have to subtract interest income tax (commonly 15.4% in Korea) and inflation to get your real return. For instance, even a nominal 5% becomes a real compound rate of about 2% if inflation runs at 3%.
How can I maximize the compounding effect?
Three things are key. First, start as early as possible to give compounding more time to work; second, reinvest your interest and dividends instead of spending them; and third, steadily increase your regular contributions as much as you can afford. Time is the most powerful variable of all.
Updated 2026 — latest rates

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