How the balance grows
Every month the balance is multiplied by a growth factor that matches your compounding choice, and your monthly deposit is added. The result is the same as the standard formula when there are no deposits. The table shows the balance at the end of selected years so you can see growth speed up over time.
Making the most of it
- Start early. Time matters more than the size of the starting amount.
- Small monthly deposits add up. Try 5,000 a month and watch the final balance.
- Compare with simple interest to see how much compounding adds.
Rates are not guaranteed. Use the ROI calculator to measure what an investment really returned.
Frequently asked questions
What is compound interest?
Interest that is added to your balance and then earns interest itself. Simple interest only pays on the original amount, so compound interest grows faster the longer you leave it.
What is the compound interest formula?
Final amount = P × (1 + r ÷ n)^(n × t), where P is the starting amount, r the yearly rate as a decimal, n the number of times interest is added per year and t the years.
Does compounding more often help?
A little. Monthly compounding earns slightly more than yearly at the same rate. At 12% for 1 year on 100,000, yearly gives 112,000 and monthly gives 112,682.50.
How are monthly deposits treated?
A deposit is added at the end of each month. Interest on the growing balance is added using the compounding you choose.
What is the Rule of 72?
A quick estimate: divide 72 by the yearly rate to get the years needed to double your money. At 8% it is about 9 years.
Is interest-based growth allowed in Islamic finance?
Interest (riba) is not permitted. For halal investing, use this only to see growth at an expected profit rate, and ask a scholar or an Islamic bank about suitable products.