Financial Tools
Compound Interest Calculator
See the power of compounding. Calculate how your initial deposit grows with interest compounded daily, monthly, or annually.
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The Power of Compound Interest
Albert Einstein reportedly called compound interest the "eighth wonder of the world." Unlike simple interest calculated only on the principal, compound interest is calculated on both the principal and the interest already earned, making your wealth grow exponentially over time.
Compounding Frequency: Why It Matters
The more frequently interest compounds, the more you earn:
- Annually: Interest added once per year. The most common for savings bonds.
- Quarterly: Interest added 4 times a year. Common for many investment accounts.
- Monthly: Interest added 12 times a year. Common for High Yield Savings Accounts (HYSA), yielding noticeably more than annual compounding.
- Daily: Interest added 365 times a year. The most powerful form of compounding, used by some top-tier savings products.
📈 The Rule of 72
A simple mental math trick: divide 72 by your interest rate to estimate how many years it takes to double your money. At 6% annually, your investment doubles in about 12 years (72 ÷ 6 = 12). This illustrates why starting to save early is so powerful.
Frequently Asked Questions
The Rule of 72 is a quick mental math trick: Divide 72 by your annual interest rate to find out exactly how many years it will take for your initial investment to double in value.
The more frequently interest is added to your principal (e.g., daily vs. annually), the more often those interest earnings can generate their own interest, accelerating exponential wealth growth.
While a lump sum gives money more time to compound, combining a lump sum with aggressive monthly contributions accelerates the compounding curve exponentially over decades.