Compound Interest Calculator

Compound interest is interest paid on both the original principal and on previously earned interest. Over long horizons it produces dramatically different outcomes than simple interest — Einstein reportedly called it 'the eighth wonder of the world.'

Core formula

Given a principal P, an annual rate r, the number of compounding periods per year n, and a time horizon of t years:

FV = P × (1 + r/n)^(n × t)

With monthly contributions

When you add a fixed monthly contribution PMT (end of each month), the future value also includes an annuity component:

FV_contributions = PMT × ((1 + r_m)^months − 1) / r_m, where r_m is the equivalent monthly rate

Worked example

Save 1,000 SAR upfront and add 500 SAR monthly for 20 years at 8% annual return, compounded monthly:

1. Total contributed = 1,000 + 500 × 240 = 121,000 SAR
2. Future value ≈ 299,500 SAR
3. Growth from compounding ≈ 178,500 SAR
4. Effective annual rate (APY) ≈ 8.30%

Reverse mode: how much do I need today?

Switch to reverse mode to enter a target future value (e.g. 'I want 1,000,000 SAR for retirement in 30 years') and the calculator solves for the upfront principal you need today, given your monthly contribution and expected return.

Practical tips

• Start early — 10 extra years can double the final amount.
• Monthly contributions compound too; even small amounts add up over decades.
• Compounding frequency matters less than you'd think for typical rates; monthly is a good default.
• Effective annual rate (APY) is the rate that makes a single annual compounding produce the same outcome — use it to compare offers across different compounding frequencies.