Compound Interest Calculator

See what a starting amount plus steady monthly contributions grows into — and how much of the final number is pure interest.

Formula: standard compound-interest math (monthly compounding). Last verified: July 2026.

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:

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.

Three savers, one uncomfortable lesson

The textbook argument for starting early is usually made with a vague appeal to "the magic of compounding". It is more persuasive with numbers. Three people each save $200 a month into an account returning 7%, and each stops at 65. The only difference is when.

Emma pays in half of what Lisa does and finishes with nearly three times as much. She stopped contributing at 35 and simply left the balance alone for thirty years. Sam, who never stopped, ends up ahead — but note that his last $72,000 of contributions bought him only about $244,000 more than Emma's first $24,000 did.

The lever here is not discipline or return. It is how long each dollar sits invested. A dollar saved at 25 has forty years to double roughly four times over; a dollar saved at 55 has ten years to double once. That is the whole result, and it is why "I'll start when I earn more" is such an expensive sentence. Sam's and Lisa's figures come straight out of the calculator above; Emma's take two runs — first her ten years of contributions, then that balance as the starting amount with no monthly addition for the remaining thirty years.

The cost of a 1% fee

Fees compound in exactly the same way returns do, which is why a number that sounds trivial is not. Take $300 a month for 30 years:

• At a 7% net return: $365,991
• At 6% — the same investment, minus a 1% annual fee: $301,355

The fee costs $64,637, or about 18% of the final balance, on total contributions of $108,000. Nobody would agree to hand over 18% of their retirement account; expressed as "1% a year", most people sign without blinking. When comparing funds or advisers, put the fee difference into the return field above and read the gap.

The formula, so you can check us

Nothing here is proprietary. For a starting balance P, a regular contribution PMT, an annual rate r compounded n times a year for t years:

FV = P(1 + r/n)^nt + PMT × [((1 + r/n)^nt − 1) ÷ (r/n)]

The first term grows the money you started with; the second grows the money you add along the way. This calculator applies contributions at the end of each period, which is the conservative convention — contributing at the start of each period yields slightly more. Every figure on this page comes out of that formula, so any spreadsheet will reproduce them.

Sources

The formula is arithmetic and needs no authority. Two things on this page are not arithmetic — the return you should assume, and what a fee does to it — and those are where a projection quietly turns into a promise. Both are sourced:

• NYU Stern — Historical returns on stocks, bonds and bills, 1928 to date — the dataset behind the ~10% figure. Over the 98 years to 2025 the S&P 500 returned 10.02% a year with dividends reinvested, which is where the ~7% after-inflation figure comes from once roughly 3% a year of inflation is taken out. Long-run averages are not forecasts, and the same table is the easiest place to see it: 1931 came in at −43.8% and 1954 at +52.6%. Nobody earned 10.02% in any particular year.
• SEC Office of Investor Education — How Fees and Expenses Affect Your Investment Portfolio (PDF) — the regulator's own worked example of the point made above, that a fee described as 1% a year is not a 1% cost. Its illustration uses $100,000 over 20 years; the section above uses monthly contributions over 30, which is why the share lost is larger here.
• Investor.gov — Compound interest calculator — run by the SEC, and the simplest way to check this page against something with nothing to sell you. Set it to compound monthly and the figures above should reproduce.

Nothing here is advice about what to buy. The tables show what a rate does to a sum over time, which is a different question from whether you will earn that rate.

This tool is for general information only and is not financial advice.

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