Compound Interest FAQ

The questions that come up most

Grouped roughly by what people are trying to work out. If your question is about a specific calculator, the page for that tool usually has its own set of answers at the bottom.

Compound interest questions and answers

What is compound interest, in one sentence?

Interest calculated on your original money and on the interest it has already earned, so the amount added grows each period rather than staying flat.

What is the compound interest formula?

FV = P × (1 + r/n)^n×t for a single amount. For regular deposits you add the annuity term, FV = PMT × [((1 + r/n)^n×t − 1) / (r/n)]. Both are derived on the formula page.

What return rate should I use?

There is no correct answer, only a defensible range. Long-run diversified equity assumptions commonly sit between 5% and 8% before inflation; cash and bonds are far lower. Running two rates tells you more than agonising over one, because the gap between them is the uncertainty.

Why does my result differ from another calculator?

Almost always compounding frequency or contribution timing. Many tools credit a full period of growth to deposits made during that period, which inflates the answer. This site compounds each deposit from when it arrives — see how we calculate.

Does compounding frequency matter much?

Less than people expect. On $10,000 at 6% for ten years, annual compounding gives $17,908.48 and daily gives $18,220.29. The rate matters far more than the schedule.

Should I contribute at the start or the end of the month?

The start, if you have the choice — each deposit earns one extra period, which multiplies the contribution part of the result by exactly (1 + r/n). Real but small; see contribution timing.

How long does money take to double?

Divide 72 by the percentage rate for a quick estimate. At 7% that is about 10.3 years against an exact 10.24 with annual compounding.

Do these calculators include tax and fees?

No. Both depend on your country and product. A good approximation for fees is to subtract the annual charge from the return rate before calculating — a 7% return with a 0.9% charge behaves much like 6.1%.

Are the results adjusted for inflation?

No, unless a page says so. A projection of $500,000 in thirty years has roughly the purchasing power of $238,371 today at 2.5% inflation. The today's dollars page does the conversion.

Is a lump sum better than monthly contributions?

For the same total amount, yes — money invested earlier compounds for longer. That is arithmetic, not advice. Most people do not have the lump sum, and the monthly habit is the plan they can actually keep.

Why does my balance grow so slowly at first?

Because early on, most of it is money you deposited rather than growth. Growth only overtakes contributions once there is enough balance and enough time — at 7% with regular deposits, around year 19.

Is my data stored when I use a calculator?

No. Every calculation runs in your browser. Nothing you enter is transmitted or saved — there is no server-side calculation endpoint to send it to. See the privacy policy.

Can I put these calculators on my own site?

Yes. The embed page has the code, and section 6 of the terms covers the conditions — essentially, keep the attribution link.

I think one of your numbers is wrong. What should I do?

Email contact@compoundcalc.com with the page and the figure. Numerical reports are checked against an independent reference calculation, and corrections are the most welcome email this site receives. The process is described in the editorial policy.