Enter your principal, rate, and time to see how your investment grows with the power of compounding.
Compound interest means you earn interest on your interest — not just your original principal. The more frequently it compounds, the faster your money grows.
Two accounts with the same stated annual rate can grow at slightly different speeds depending on how often interest is compounded. Compounding daily credits interest more often than compounding annually, and each round of interest immediately starts earning its own interest — which is why more frequent compounding, all else equal, produces a modestly higher return over time.
Simple interest earns a fixed amount each period, based only on the original principal. Compound interest earns on principal plus all previously accumulated interest, so the growth curve steepens over time instead of staying flat.
Because growth compounds exponentially, starting a few years earlier — even with smaller contributions — can outperform starting later with larger ones, simply because the money has more compounding periods behind it.
A seemingly small difference in annual rate compounds into a much larger gap in final value the longer the money is invested, which is why comparing rates carefully matters more for long time horizons.
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any interest already earned, so growth accelerates over time rather than staying flat.
Yes, though the effect is smaller than most people expect. Daily compounding grows an investment faster than annual compounding at the same stated rate, and the gap widens at higher rates or over longer time horizons.
Because compound growth is exponential, not linear, money invested early has more compounding periods to grow — a dollar invested a decade earlier can end up worth significantly more than the same dollar invested later.