# Compound interest calculator

Our compound interest calculator can help determine how an initial amount of money, known as the principal, will grow over time when it earns interest that is compounded at regular intervals.

Page written by Ian Hawkins. Last reviewed on May 16, 2024. Next review due March 1, 2025.

R
.00
R
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5 years
2%

This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

Total balance

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Total principal

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Compound interest

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## Definitions

• Initial Investment: The initial amount of money invested or loaned at the beginning of the compounding period.
• Contribute: Additional contributions made to the investment or loan at regular intervals, such as monthly or annually.
• Interest Rate: The rate at which interest is applied to the initial investment and any accumulated interest, expressed as a percentage.
• Compound It: The process of adding the accumulated interest back to the initial investment or loan amount, resulting in the compounding effect over multiple periods.

## What is compound interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods, leading to exponential growth of an investment or loan over time.

## How to calculate compound interest

Our calculator requires you to input the initial amount (principal), the interest rate, the number of times interest is compounded per year, and the time period for which the interest will be calculated. With this information, the calculator can provide you with an estimate of the final amount that will be accrued.

This tool is particularly useful for individuals, investors, and financial professionals to plan and strategise for savings, investments, business loans, and other financial endeavours. It enables one to see how different interest rates and compounding frequencies can impact the growth of their money over time.

## The benefits of compound interest

Compound interest offers several benefits, including exponential growth of savings or investments over time, the potential to generate significant wealth through regular contributions, and the ability to harness the power of compounding for long-term financial goals.