Compound Interest Calculator

Our SmartxTool Compound Interest Calculator uses standard financial formulas to project your wealth growth:

Key Definitions:

P = Principal Amount (initial lump sum)

PMT = Regular Payment amount per compounding period (e.g., monthly contribution if compounded monthly)

r = Annual Interest Rate (as a decimal, so 5% is 0.05)

n = Number of times interest is compounded per year (e.g., 1 for annually, 12 for monthly)

t = Number of years of investment

1. Future Value of a Single Sum (Initial Principal):
This calculates how much your initial lump sum will grow.
FV_principal = P * (1 + (r / n)) ^ (n * t)

2. Future Value of a Series of Payments (Regular Contributions):
This calculates how much your regular contributions will grow.
FV_contributions = PMT * ( ( (1 + (r / n)) ^ (n * t) ) – 1) / (r / n) )

3. Total Future Value:
This is the grand total of your investment after the given time.
Total_FV = FV_principal + FV_contributions

4. Inflation-Adjusted Future Value (Real Value):
This shows what your future money will be worth in today’s buying power, after accounting for inflation.
Real_FV = Total_FV / (1 + Inflation_Rate) ^ t
(Where Inflation_Rate is the annual inflation rate as a decimal)

5. Total Interest Earned:
This is the total profit you made from interest.
Total_Interest = Total_FV – P – (Total_Contributions_Made)
(Where Total_Contributions_Made = PMT * n * t, if PMT is per period)

6. Tax Calculation (Simplified):
This estimates the tax on your earnings.
Tax_Amount = Total_Interest * Tax_Rate
(Where Tax_Rate is your annual tax rate as a decimal. Note: Actual tax rules can be more complex.)

These formulas work together to give you a comprehensive and realistic view of your potential financial growth.