Compound Interest Calculator

Compound interest is interest earned on both your original amount and the interest it has already generated. Over time, this “interest on interest” effect accelerates your overall growth.

Interest is compounded depending on the investment and account. A higher compounding frequency typically results in slightly higher returns.

With this calculator, you can choose the compounding frequency:

• Daily
• Weekly
• Monthly
• Quarterly
• Yearly

Simple interest based solely on the principal, compound interest magnifies your returns, especially when combined with regular investments over time. This powerful strategy can significantly accelerate the growth of your savings or investments, maximising long-term wealth potential.

Example: An initial RM10,000 investment at a 5% annual rate over 20 years clearly shows how compound interest outpaces simple interest and no-interest scenarios.

After 20 years, an initial RM10,000 investment with no compounding (simple interest) would grow to RM20,000, while the same investment with compound interest would increase to RM26,532.98!

Compounding monthly instead of annually does increase your total returns, but the difference is usually modest in the short term. Over longer periods—10 years or more—monthly compounding can produce noticeably higher growth because interest is added more frequently. The higher the interest rate and the longer the time horizon, the bigger the difference becomes.

You can maximise your compound interest by taking steps that help your money grow for longer and at higher rates. The most effective strategies include:

• Contributing regularly: frequent deposits give your balance more opportunities to compound.
• Starting earlier: the longer your money stays invested, the faster compounding accelerates.
• Increasing your contribution amount: a larger base leads to larger compounded returns.
• Choosing higher long-term return options: accounts or investments with better expected returns compound more effectively over time.

While compound interest alone can significantly boost your savings, consistent contributions can supercharge your growth. In the example above, starting with RM10,000 at a 5% annual yield, compounded yearly over 20 years, yields RM16,523.98 in interest.

However, by contributing an additional RM100 at the end of each month, you would earn a total of RM32,212.12 in interest from a total deposit of RM34,000 (RM10,000 principal + RM24,000 contributions). This demonstrates how the combination of compounding and regular contributions work together to build long-term wealth

Your time horizon should reflect the financial goal you’re planning for. Short-term goals—like a holiday, a home deposit, or an emergency fund—usually involve a 1–5 year horizon, where returns tend to be smaller and more predictable. Medium-term goals, such as education planning or major purchases, often require 5–10 years to see meaningful compounding.

For long-term goals like retirement or building wealth, a 10–30 year horizon provides the most realistic projection because compounding accelerates significantly over extended periods. In general, the longer your time horizon, the more accurate and meaningful your projections will be, since short-term market movements have less impact on long-term trends.

If you’re unsure, choose the longest timeline relevant to your goal—this gives you a clearer picture of your potential growth and helps set more achievable expectations.