Compound Interest Calculator

Quickly simulate simple and compound interest.

What is compound interest?

Compound interest represents the accumulated growth of an amount over time. Instead of always calculating over the initial principal, each new interest portion is added to the balance, making the total grow faster every period.

That’s why it is called interest on interest. No wonder many consider this effect one of the greatest forces in finance.

Where does compound interest show up?

Comparison: simple vs compound interest

Model How it works Example ($1,000 at 10% per year, for 3 years)
Simple Always calculated over the initial principal $1,300
Compound Calculated over the updated amount each period $1,331

Compound interest formula

M = C × (1 + i)t

Example: investing $10,000 at 5% per year for 3 years → M = 10,000 × (1 + 0.05)3 = $11,576.25

How to calculate in practice?

  1. Set the initial amount, period, and rate.
  2. Use the formula or our compound interest calculator.
  3. Track month-by-month evolution in the table and chart.

What if there are monthly deposits?

When there are recurring deposits, the calculation changes. The formula is:

M = C × {[(1 + i)t – 1] / i}

Example: depositing $200 every month at 1% per month, after 12 months the approximate amount will be $2,714.

The negative effect of compound interest

When applied to debt, compound interest can turn into a snowball. A credit card balance, for example, can double in a few months if not paid off.

Learn more

Beyond our calculator, explore content about:

Just as compound interest helps money grow step by step, you can apply this concept to daily life. Try the Pomodoro method to organize small tasks with focus and discipline, and see how small efforts compound into big results.

Warren Buffett: time, discipline and the power of compound interest

Warren Buffett likes to say that building wealth is more about time than “strokes of genius.” His story backs it up. Born in 1930 in Omaha (Nebraska), he started early: as a teenager, he bought stocks, read financial statements, and sold small services. In college, he found the right book — “The Intelligent Investor,” by Benjamin Graham — and later studied with Graham at Columbia. The method was simple and demanding: buy businesses worth more than the quoted price and be patient.

In 1956, Buffett set up his first investment partnership (Buffett Partnership Ltd.). The focus was disciplined: deploy capital, reinvest earnings, and avoid emotional moves. In 1965, he took control of a struggling textile mill called Berkshire Hathaway. The pivot was turning the old manufacturer into a holding company: he bought insurers (the insurance “float” became long-term fuel), later entire businesses and stakes in solid companies. Each cycle, profits were reinvested, not distributed — more base on which the next interest would accrue.

Here’s the point that’s often missed: compound interest doesn’t shine at the beginning. In the first years, the chart seems stubbornly flat. You contribute, reinvest, and the total barely moves. It’s normal. The compounding effect only shows strength after a good amount of persistence. Buffett saw this in practice: the 60s, 70s, 80s… and wealth increasingly pulled by accumulated earnings, not just contributions.

Another piece of the puzzle: consistent contributions and reinvestment. Buffett didn’t chase the “next rocket.” He used operating and investment profits to buy more quality assets. As the base grows, each percent yields more absolute dollars. The same principle applies to those who invest month after month: the first deposits look small; ten or twenty years later, the snowball rolls by itself.

Patience works because he withstood crises — and there were many. The 1973–74 decline, the 1987 crash, the 2000 dot-com bust, the 2008 financial crisis, the 2020 pandemic… In all of them, anxiety invites you to “do something.” Buffett, instead, stuck to the plan: cash for opportunities, focus on quality, decades-long view. That way, he avoided selling cheaply what took years to build and, when prices were attractive, he added positions — fresh contributions to accelerate compounding.

Practical lessons

Want to see it in practice? Use the compound interest calculator and simulate monthly contributions for 20–30 years.

Source: Warren Buffett Profile — InfoMoney

Luiz Barsi: dividends, routine, and the long-term compounding effect

Luiz Barsi Filho often talks about “building income” with the calm of someone who has seen many cycles come and go. Born in São Paulo in 1939, he started from the bottom — worked early, studied accounting, learned to read financial statements, and discovered a long-term path in the stock market. No shortcuts: the idea was to build a retirement-like portfolio that paid enough dividends to fund life. The method became simple over the years: buy stakes in good businesses, contribute regularly, reinvest dividends, repeat.

Barsi became known as the “dividend king” not because of catchphrases, but process. He always treated dividends as the raw material of compounding: when a stock pays, that money goes back to buy more shares of the same company (or another solid one), increasing the base that will receive the next dividends — and so on. At the start, it seems small. The first years require patience: you contribute, dividends arrive, but the balance grows slowly. That’s normal. The interest on interest only truly “wakes up” after a long stretch of consistency.

The discipline survived major Brazilian crises: hyperinflation and economic plans, the 1999 maxi-devaluation, 2008, recessions, the pandemic. In all of them, the script was the same: focus on cash-generating businesses, avoid selling out of anxiety, and use bad-price moments to reinforce positions. It’s not fearlessness — it’s method. Those who keep contributing in tough periods win twice: they buy cheaper and accelerate compounding when the cycle turns.

Another pillar is criteria: look at quality (profit history, leverage, governance, sector) and price (don’t pay anything for a good company). Barsi also insists on low costs and on not “nicking” the strategy — every unnecessary withdrawal drains fuel from the dividend engine. Over decades, the result is that income grows along with wealth: dividends increase the invested base, which generates new dividends, which swell the base again. Snowball.

Practical lessons

Want to visualize it? Use the compound interest calculator with monthly contributions and long horizons.

Source: Luiz Barsi Profile — InfoMoney