Compounding Interest Calculator
Calculate the future value of your investments with compounding interest. Visualize your wealth growth over time with our interactive chart.
What is Compounding Interest?
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Thought to have originated in 17th-century Italy, compound interest can be thought of as "interest on interest," and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.
How to Use the Compounding Interest Calculator
Simply adjust the configuration values to see how your investment grows:
- Start Sum: The initial amount of money you are investing.
- Monthly Contribution: The amount of money you plan to add to your investment every month.
- Annual Interest Rate: The expected yearly return on your investment.
- Timespan (Years): How long you plan to keep the money invested.
The Power of Compounding
The chart shows two lines:
- NAV Investment (Principal): This represents the total amount of money you have contributed (Start Sum + all Monthly Contributions).
- Total Sum (Including Interest): This represents the total value of your investment, including all the interest earned over time.
Notice how the gap between the two lines grows wider over time—that's the power of compounding interest at work!