Compound Interest Calculator
See what a starting amount plus steady monthly contributions grows into — and how much of the final number is pure interest.
How compounding works
Compound interest means you earn returns on your returns. Year one, $5,000 at 7% earns $350. Year two, you earn 7% on $5,350 — and the snowball keeps accelerating. The math: A = P × (1 + r/n)nt, where n is how many times per year interest compounds (this calculator compounds monthly, matching most savings and investment accounts).
The real magic ingredient: time
With $300/month at 7% annual returns:
| Years invested | You contributed | Balance | Growth (interest) |
|---|---|---|---|
| 10 | $36,000 | ~$51,900 | ~$15,900 |
| 20 | $72,000 | ~$156,300 | ~$84,300 |
| 30 | $108,000 | ~$367,000 | ~$259,000 |
Note what happens between years 20 and 30: contributions rise by $36,000 but the balance rises by over $210,000. In the later decades, the interest does most of the work — which is why starting ten years earlier matters more than contributing twice as much later.
The Rule of 72
A quick mental shortcut: divide 72 by the annual return to get the years needed to double your money. At 7%, money doubles roughly every 72 ÷ 7 ≈ 10 years. At 3%, it takes 24 years — the difference between an investment account and a basic savings account, compounded over a career, is enormous.
What return should you assume?
- High-yield savings: 3–5% (varies with central bank rates)
- Broad stock index funds: ~7% is the common long-run assumption after inflation (~10% before inflation), with big year-to-year swings
- Bonds: 3–5% long-run
Past performance never guarantees the future — treat projections as scenarios, not promises.
Frequently asked questions
Does this account for inflation?
No — enter an inflation-adjusted return (e.g., 7% instead of 10% for stocks) to see the answer in today's purchasing power.
Does this account for taxes?
No. In tax-advantaged accounts (401(k), IRA, ISA) growth compounds untaxed, which is exactly why they're powerful. In taxable accounts, taxes on dividends and gains reduce the effective return.
Monthly vs. annual compounding — does it matter?
A little. $10,000 at 7% for 20 years grows to $38,697 with annual compounding and $40,387 with monthly. Frequency helps, but rate and time dominate.
This tool is for general information only and is not financial advice.