Back to Guides
Investments March 20, 2026 Investment Pro @ eCalcy 10 min read
What is Compound Interest? Formula, Example & Calculator
Learn compound interest formula with examples. Calculate your investment growth using our free calculator.
Compound interest is the interest calculated on both the initial principal and accumulated interest. It helps your money grow faster over time.
Compound Interest Formula
A = P(1 + r/n)^(nt)
Where A is the final amount, P is principal, r is rate, n is frequency, and t is time.
Example Calculation
If you invest $1,000 at 10% annually for 5 years, your total investment value becomes approximately $1,610.
Why Compound Interest is Powerful
- Faster wealth growth: Interest keeps building on top of previous interest.
- Ideal for long-term investment: The longer you stay invested, the steeper the curve.
- Works automatically: No manual effort required once the system is set up.