Python Compound Interest Calculator

Build a compound interest calculator with Python. Visualise how your money grows with different rates, contributions, and time periods.

def compound_interest(principal, rate, years, monthly_contribution=0):
    """Calculate compound interest with optional monthly contributions."""
    balance = principal
    history = [balance]

    for year in range(1, years + 1):
        # Add monthly contributions
        balance += monthly_contribution * 12
        # Apply annual interest
        balance *= (1 + rate / 100)
        history.append(round(balance, 2))

    return balance, history

# Example: £10,000 initial + £500/month at 7% for 30 years
final, history = compound_interest(10000, 7, 30, 500)
print(f"Final balance: £{final:,.2f}")
total_contributed = 10000 + (500 * 12 * 30)
print(f"Total contributed: £{total_contributed:,.2f}")
print(f"Interest earned: £{final - total_contributed:,.2f}")

import matplotlib.pyplot as plt

# Compare different scenarios
scenarios = [
    ("7% no contributions", compound_interest(10000, 7, 30)[1]),
    ("7% + £200/month", compound_interest(10000, 7, 30, 200)[1]),
    ("7% + £500/month", compound_interest(10000, 7, 30, 500)[1]),
    ("10% + £500/month", compound_interest(10000, 10, 30, 500)[1]),
]

plt.figure(figsize=(12, 6))
for label, data in scenarios:
    plt.plot(range(len(data)), [d/1000 for d in data], label=label, linewidth=2)

plt.xlabel("Years")
plt.ylabel("Balance (£k)")
plt.title("Compound Interest: The Power of Time and Contributions")
plt.legend()
plt.grid(True, alpha=0.3)
plt.savefig("compound_interest.png", dpi=150)
plt.show()

# Interactive version with different compounding frequencies
def compound_with_frequency(principal, annual_rate, years,
                           monthly_contribution=0, frequency=12):
    """
    frequency: 1=annually, 4=quarterly, 12=monthly, 365=daily
    """
    balance = principal
    periods = years * frequency
    period_rate = annual_rate / 100 / frequency

    for period in range(periods):
        if period % (frequency // 12) == 0 and monthly_contribution > 0:
            balance += monthly_contribution
        balance *= (1 + period_rate)

    return round(balance, 2)

# Compare compounding frequencies
for freq, name in [(1, "Annually"), (4, "Quarterly"), (12, "Monthly"), (365, "Daily")]:
    result = compound_with_frequency(10000, 7, 30, 500, freq)
    print(f"{name}: £{result:,.2f}")