Compound Interest Calculator
See the power of compound interest on your savings
Parameters
Future Value
$0
Total Contributions
$0
Total Interest Earned
$0
Effective APY
0%
Years to Double (Rule of 72)
-
Contributions vs Interest
Growth Over Time
Year-by-Year Breakdown
| Year | Starting Balance | Contributions | Interest | Ending Balance |
|---|
The Power of Compound Interest
Compound interest is often called the eighth wonder of the world — and for good reason. When your interest earns interest, your money grows exponentially over time. This calculator shows you exactly how a combination of an initial deposit, regular monthly contributions, and time can build significant wealth.
The key to maximizing compound interest is starting early and contributing consistently. Even modest monthly contributions of $100 to $500 can grow into hundreds of thousands of dollars over 20 to 30 years, depending on your rate of return. Use this calculator to visualize different scenarios and find the savings plan that works for you.
Frequently Asked Questions
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 where your money grows faster the longer it stays invested.
The more frequently interest compounds, the faster your money grows. Daily compounding is better than monthly, which is better than quarterly. Most savings accounts compound daily or monthly. This calculator lets you choose different compounding frequencies to see the impact on your final balance.
Savings accounts typically earn 4-5% APY (as of 2024-2025). Stock market index funds have historically averaged about 7-10% annually over long periods. Conservative bonds may earn 3-5%. The right rate depends on where you invest and your risk tolerance. Try different rates in the calculator to see a range of outcomes.
This calculator shows nominal growth (before taxes and inflation). To estimate real returns, subtract an estimated inflation rate (typically 2-3%) from your expected rate of return. For example, a 7% return with 3% inflation gives approximately 4% real growth. Tax treatment depends on your account type — Roth IRAs grow tax-free, while taxable accounts owe taxes on gains.