How to calculate compound growth

Compound growth applies each percentage increase to the new value rather than the original value. This means the amount of growth increases with each period.

Example:
Starting value = $1,000
Growth rate = 10%
Periods = 3

After period 1 = $1,100
After period 2 = $1,210
After period 3 = $1,331

Final value = $1,331
Total growth = 33.1%

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When would you use compound growth?

Compound growth is useful when a value increases repeatedly over time and each new increase is calculated from the previous value rather than the original amount. It is commonly used for investments, savings, business growth, population growth and other values that grow at a consistent percentage rate.

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For example, if $1,000 grows by 10% per year, after the first year it becomes $1,100. In the second year, the 10% growth is calculated on $1,100 rather than the original $1,000, giving a value of $1,210.

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Important: Compound growth becomes more powerful over longer periods because each percentage increase applies to the previous period's increased value. This is different from simply adding the same fixed amount each year.

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Related calculation: To see the overall percentage change between your starting value and final value, use our Percentage Change Calculator.