Understanding how your money can grow over time is crucial for financial planning. The compound interest calculator is a powerful tool that demonstrates the magic of compounding. Compound interest is essentially "interest on interest." It means that not only do you earn interest on your initial investment (the principal), but you also earn interest on the accumulated interest from previous periods. This exponential growth can significantly boost your savings and investments over the long term, especially when combined with consistent contributions and a favorable interest rate.
How it works: The calculator takes your initial investment, the additional amount you plan to deposit regularly, the expected annual interest rate, and the number of years you plan to invest. It then calculates the total future value of your investment, including both the principal and the compounded interest earned. The frequency of compounding (annually, semi-annually, quarterly, monthly) also plays a role, with more frequent compounding generally leading to slightly faster growth. This tool helps you visualize the potential impact of starting early and investing consistently.
Annually
Semi-Annually
Quarterly
Monthly
function calculateCompoundInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100;
var years = parseInt(document.getElementById("years").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
if (isNaN(principal) || isNaN(annualContribution) || isNaN(interestRate) || isNaN(years) || isNaN(compoundingFrequency)) {
document.getElementById("result").innerText = "Please enter valid numbers for all fields.";
return;
}
var totalAmount = 0;
var periodicRate = interestRate / compoundingFrequency;
var numberOfPeriods = years * compoundingFrequency;
// Calculate future value of initial investment
totalAmount = principal * Math.pow((1 + periodicRate), numberOfPeriods);
// Calculate future value of annual contributions
// This formula calculates the future value of an ordinary annuity
var futureValueOfContributions = annualContribution * (((Math.pow((1 + periodicRate), numberOfPeriods) – 1) / periodicRate));
totalAmount += futureValueOfContributions;
var totalInterestEarned = totalAmount – principal – (annualContribution * years);
document.getElementById("result").innerText =
"Total Amount After " + years + " Years: $" + totalAmount.toFixed(2) + "\n" +
"Total Interest Earned: $" + totalInterestEarned.toFixed(2);
}