Variable Key
Compound interest formula
Standard formula for periodic compounding.
Continuous compounding
Limit as compounding frequency → ∞.
Find principal
How much to invest today to reach a goal.
Find rate
What annual rate is needed?
Rule of 72
Approximate years to double at a given rate.
Compound interest calculates interest on both the initial principal and the previously accumulated interest. Unlike simple interest (which only grows on the principal), compound interest grows exponentially — your interest earns interest. Einstein reportedly called it "the eighth wonder of the world."
Pro Tip
The frequency of compounding matters most at higher rates. At 1%, daily vs annual compounding adds almost nothing. At 10%, it adds $47 per $1,000 per year.
Did You Know?
If you had put $1 in a bank in the year 1 AD at 5% compound interest, by the year 2000 it would be worth more than all the gold ever mined on Earth.