A powerful tool to calculate the future and present value of your investments with compound interest.
Note: Present Value (PV) is typically calculated for a lump-sum investment to determine the initial capital needed to reach a future goal.
| Year | Opening Balance | Annual Contribution | Annual Interest | Closing Balance |
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Use our free compound interest calculator to evaluate how your savings or investments might grow over time, with or without regular contributions. Our tool helps you see how compound interest can increase the value of your money as you plan for the future.
Compound interest means earning interest on both the principal amount and the accumulated interest from previous periods. This creates an exponential growth effect.
The higher the number of compounding periods, the larger the effect of compounding.
Compound interest is calculated by multiplying the initial principal amount by (1 + annual interest rate) raised to the power of the number of compounding periods, and then subtracting the principal.
The formulas for calculating compound interest are:
= [P (1 + i)n] – P
or
= P [(1 + i)n – 1]
Where:
For example, if you had a 3-year loan of $10,000 at an interest rate of 5%, compounding annually. What would be the amount of interest? In this case, using the latter formula, it would be:
$10,000 [ ( 1 + 0.05 )3 – 1 ] = $10,000 [ 1.157625 – 1 ] = $1,576.25
Tip
The Rule of 72 is another way to estimate compound interest. If you divide 72 by your rate of return, you find out how long it will take for your money to double in value. For example, if you have $100 that was earning a 4% return, it would grow to $200 in 18 years (72 / 4 = 18).To compute the future value of your investment, you don't need to memorize any formulas or perform any calculations. All you need to do is to fill in the appropriate fields on our calculator:
To calculate the future value of your investment, you can use this equation:
FV = PV × (1 + r)^n
where:
That's it! In less than a second, our calculator makes every computation and displays the results. They are shown in the future value field, where you should see the future value of your investment.
In conclusion, the future value calculator helps you make smart financial decisions. With the mobile version of our application, you can also use our FV calculator wherever and whenever you want.。
Present value is compound interest in reverse: finding the amount you would need to invest today in order to have a specified balance in the future.
To compute the present value of your investment, you don’t need to memorize any formulas or perform calculations. Simply fill in these fields on our calculator:
To calculate the present value of future incomes, you should use this equation:
PV = FV / (1 + r)n
where:
In our example, it will look like this:
$100 / (1 + 0.08)2 = $85.73
Now you know how to estimate the present value of your future income on your own, or you can simply use our present value calculator.
Suppose you deposit $15,000 into a high-yield savings account offering a 5% annual percentage yield (APY), with interest compounded daily. You plan to make no additional contributions after the initial deposit. To project your earnings, input these parameters into a compound interest calculator:
PV (along with FV, I/Y, N, and PMT) is an important element in the time value of money, which forms the backbone of finance. There can be no such things as mortgages, auto loans, or credit cards without PV.
To learn more about or do calculations on future value instead, feel free to pop on over to our Future Value Calculator.
Simple interest is calculated only on the initial principal amount. Compound interest is calculated on the principal *and* on the accumulated interest from previous periods. This "interest on interest" effect is why compounding leads to much faster, exponential growth over time. You can compare them with our Simple Interest Calculator.
Compound interest is a financial concept where you earn interest not only on the initial principal but also on the accumulated interest from previous periods. This means your money can grow exponentially over time.
The more frequently interest is compounded, the more you will earn. Therefore, daily compounding is slightly better than monthly compounding. While the difference may be small on a daily basis, it can add up to a noticeable amount over many years, especially with a large principal amount.
Virtually anyone saving or investing for the long term benefits from compound interest. This includes: