Understand how your money can grow over time with the power of compound interest. Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods. It's often referred to as "interest on interest." This calculator helps you estimate the future value of an investment based on your initial deposit, regular contributions, interest rate, and compounding frequency.
Annually
Semi-Annually
Quarterly
Monthly
Daily
Understanding Compound Interest
Compound interest is a powerful concept in finance that allows your investments to grow exponentially over time. Unlike simple interest, which is calculated only on the initial principal amount, compound interest is calculated on the principal and the accumulated interest from previous periods. This means your earnings start earning their own earnings, creating a snowball effect.
Key Components:
Principal: The initial amount of money you invest.
Annual Contribution: The additional amount you plan to invest each year. This can significantly boost your growth.
Annual Interest Rate: The percentage return you expect to earn on your investment annually.
Investment Duration (Years): The length of time you plan to keep your money invested. The longer the period, the more significant the compounding effect.
Compounding Frequency: How often the interest is calculated and added to the principal. More frequent compounding (e.g., daily or monthly) generally leads to slightly higher returns than less frequent compounding (e.g., annually), assuming the same annual interest rate.
How it Works:
The formula used in this calculator is a variation that accounts for regular contributions:
n = Number of times interest is compounded per year
t = Number of years the money is invested for
C = Annual Contribution (converted to periodic contribution if needed, but for simplicity in this calculator, we're assuming the annual contribution is added at the end of each year before interest is compounded for that year, or averaged across compounding periods for a more precise calculation – our implementation will add the annual contribution annually for simplicity and clarity of the concept)
The calculator breaks down the growth into the initial investment's growth and the growth from your regular contributions.
Example:
Let's say you invest $10,000 initially, plan to contribute $1,000 annually, expect an 8% annual interest rate compounded monthly, and want to see the growth over 20 years.
With this calculator, you would enter:
Initial Investment: $10,000
Annual Contribution: $1,000
Annual Interest Rate: 8%
Investment Duration: 20 years
Compounding Frequency: Monthly (12)
The calculator would then show you the estimated future value, illustrating how your money can grow significantly due to compounding and consistent contributions.
function calculateCompoundInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var years = parseFloat(document.getElementById("years").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultElement = document.getElementById("result");
if (isNaN(principal) || isNaN(annualContribution) || isNaN(annualInterestRate) || isNaN(years) || isNaN(compoundingFrequency) ||
principal < 0 || annualContribution < 0 || annualInterestRate < 0 || years < 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var periodicInterestRate = annualInterestRate / 100 / compoundingFrequency;
var numberOfPeriods = years * compoundingFrequency;
var totalFutureValue = 0;
// Calculate future value of initial principal
var principalFutureValue = principal * Math.pow((1 + periodicInterestRate), numberOfPeriods);
// Calculate future value of annual contributions
// This simplified approach adds the annual contribution at the end of each year.
// A more precise calculation would involve adding contributions more frequently if compounding is monthly/daily.
var contributionsFutureValue = 0;
var currentPrincipal = principal;
for (var i = 0; i < years; i++) {
currentPrincipal += annualContribution; // Add annual contribution
contributionsFutureValue = currentPrincipal * Math.pow((1 + periodicInterestRate), (numberOfPeriods – i * compoundingFrequency));
// This is a simplified approach. A more accurate FV of annuity formula is better.
// Let's re-implement using FV of annuity for contributions
}
// More accurate calculation for contributions using FV of annuity formula
// FV = P * [((1 + r/n)^(nt) – 1) / (r/n)] * (1 + r/n) for contributions at the end of each period
// For annual contributions, we need to be careful with frequency.
// Let's assume the annual contribution is made once per year, and we'll calculate its future value based on its remaining compounding periods.
var fvContributions = 0;
var tempPrincipal = principal;
for (var year = 1; year <= years; year++) {
// Add annual contribution at the start of the year for simplicity of calculation
tempPrincipal += annualContribution;
// Calculate interest for this year on the accumulated amount
// This is still a simplification. The exact formula accounts for each contribution's compounding period.
// Using the standard FV of annuity formula for each year's contribution.
// FV = C * [((1 + i)^k – 1) / i], where i is the periodic rate, k is the number of periods.
// This formula applies if contributions are periodic and match compounding frequency.
// Since we have annual contributions and potentially different frequencies, a direct loop simulation is often clearer.
// Let's refine the loop to simulate compounding and contributions more accurately.
// We'll treat each year's growth based on compounding frequency, then add the annual contribution.
}
// A more robust simulation loop:
var currentTotal = principal;
var totalContributionsMade = 0;
for (var i = 0; i < years; i++) {
// Add annual contribution at the beginning of the year
currentTotal += annualContribution;
totalContributionsMade += annualContribution;
// Calculate compound interest for this year
for (var j = 0; j 1.
var periodicContribution = annualContribution / compoundingFrequency;
var totalFV = principal * Math.pow((1 + periodicInterestRate), numberOfPeriods); // FV of initial principal
// FV of an ordinary annuity formula: FV = C * [((1 + i)^n – 1) / i]
// Where C is the periodic payment, i is the periodic rate, n is the number of periods.
// However, our 'C' is annual, and 'n' is 'numberOfPeriods'. We need to adjust.
// Let's use the loop simulation as it's generally more robust for varying contribution schedules and compounding.
var finalAmount = principal;
var totalInvested = principal;
for (var year = 0; year < years; year++) {
// Add annual contribution at the start of the year
finalAmount += annualContribution;
totalInvested += annualContribution;
// Apply compounding for the year
for (var period = 0; period < compoundingFrequency; period++) {
finalAmount += finalAmount * periodicInterestRate;
}
}
totalFutureValue = finalAmount;
var totalInterestEarned = totalFutureValue – totalInvested;
resultElement.innerHTML =
"