Compound Interest Calculator
Calculate compound interest with regular contributions, showing growth over time with different compounding frequencies.
How It Works
Uses the compound interest formula A = P(1 + r/n)^(nt) plus a future value of annuity calculation for regular contributions. The compounding frequency (n) determines how often interest is calculated and added to the principal. Shows a year-by-year growth table.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Albert Einstein allegedly called it 'the eighth wonder of the world' — the key is that your money earns returns on its returns.
How does compounding frequency affect growth?
More frequent compounding produces slightly higher returns. For example, $10,000 at 6% for 20 years: annually = $32,071; monthly = $33,102; daily = $33,198. The difference is most noticeable at higher rates and longer time periods.
What is a good savings interest rate in Australia?
As of 2024-25, high-interest savings accounts in Australia offer 4.5-5.5% for balances meeting bonus conditions. Term deposits offer 4.0-5.0% depending on term length. Compare rates at the RBA or comparison sites.
How does the Rule of 72 work?
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, that is 72/6 = 12 years. At 8%, it is 72/8 = 9 years. It is an approximation but remarkably accurate.
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