Enter your numbers and see how compound interest turns small, consistent contributions into serious wealth over time.
These projections are mathematical estimates assuming a constant rate of return. Actual investment returns vary and may be negative. Past performance does not guarantee future results. This calculator does not account for taxes, fees, or inflation. Consult a qualified financial advisor before making investment decisions.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest — which only earns on the original amount — compound interest creates a snowball effect: your money earns interest, then that interest earns interest, and so on.
The mathematical formula is: A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the compounding frequency, and t is the time in years. This compound interest calculator handles all the math and adds monthly contributions, which the basic formula doesn't cover.
Higher compounding frequency means interest is calculated more often, which slightly increases your returns. Daily compounding earns more than monthly, which earns more than annual — but the difference shrinks as frequency increases. The jump from annual to monthly is meaningful; from monthly to daily, it's marginal.
For most savings accounts and CDs, interest compounds daily. For bonds and some investment accounts, it compounds semi-annually or annually. This investment growth calculator lets you compare all four to see the real-dollar difference.
Time is the most powerful variable in compound interest. A 25-year-old investing $500/month at 7% annual return will have roughly $1.2 million by age 65. A 35-year-old making the same investment will have about $567,000 — less than half — despite only starting 10 years later. Those first 10 years of compounding account for over half the final balance.
This is why financial advisors emphasize starting as early as possible, even with small amounts. A consistent $200/month from age 22 will outperform $1,000/month starting at age 40.
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously accumulated interest. Over time, compound interest produces significantly higher returns because your interest earns its own interest.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate: at 7%, your money doubles in roughly 72 ÷ 7 ≈ 10.3 years. It's an approximation, but a useful one for mental math.
The S&P 500 has historically returned about 10% annually before inflation, or roughly 7% after inflation. For conservative estimates, use 6–7%. For high-yield savings accounts, 4–5% is more realistic as of 2024–2025. Always consider whether you're modeling nominal or inflation-adjusted returns.
No. This calculator shows gross returns before taxes. In tax-advantaged accounts (401k, IRA, Roth IRA), your money compounds tax-free or tax-deferred. In taxable accounts, you'll owe taxes on interest and capital gains, which reduces your effective return.