Compound Interest Calculator
Calculate how your investments grow over time with compound interest
Results
Future Value
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Total Principal
$0.00
Total Interest
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| Year | Balance | Contributions | Interest |
|---|---|---|---|
| Enter values to see yearly breakdown | |||
See how savings grow under the most powerful force in personal finance: compounding. Enter a starting amount, an optional monthly contribution, an expected annual return, and a time horizon, and this calculator projects your future balance with a year-by-year breakdown. It is built for savers, investors, and anyone planning a long-term goal.
How to Use
- Set your principal: The amount you are starting with today.
- Add monthly contributions: Even small regular deposits compound dramatically.
- Choose an annual rate: 6-8% is a realistic range for a diversified stock portfolio.
- Set the time horizon: How many years you plan to stay invested.
- Pick a compounding frequency: Daily, monthly, quarterly, or annually.
- Read the results: Future value, total contributions, total interest, and a yearly breakdown table.
Features
- Recurring monthly contributions, not just a lump sum
- Four compounding frequencies
- Year-by-year table of balance, contributions, and interest
- Clear split between money you put in and money growth earned
- Runs entirely in your browser — no financial data leaves your device
What is Compound Interest?
Simple interest pays only on your original deposit; compound interest pays on the deposit plus all interest already earned, so growth accelerates over time. The classic formula is A = P(1 + r/n)ⁿᵗ, where P is principal, r the annual rate, n the compounding periods per year, and t the years. This calculator extends the idea to regular contributions, crediting interest each period before adding your deposit. A handy shortcut is the Rule of 72: divide 72 by your rate to estimate the years needed to double your money — at 8%, about nine years.
Use Cases
- Retirement planning: Project decades of monthly 401(k) or IRA deposits.
- Education funds: Estimate a college fund’s value when a child turns 18.
- Savings goals: Work backward from a house down payment.
- Understanding debt: Credit card balances compound against you the same way.
Tips for Realistic Projections
The most common mistake is an overly optimistic return rate, so model a conservative 5-6% scenario alongside your base case. Starting early matters more than starting big: beginning at 25 instead of 35 can roughly double a retirement balance on identical contributions, because the early money compounds for an extra decade. Finally, results are nominal — at 3% inflation, a million dollars in 30 years buys roughly what $410,000 buys today, so raise contributions as your income grows.
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Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both your original principal and the accumulated interest from previous periods. It is often called 'interest on interest' and is the key driver of long-term investment growth.
How does compounding frequency affect returns?
More frequent compounding (e.g., daily vs. annually) results in slightly higher returns because interest is calculated and added to the balance more often, allowing interest to earn interest sooner.
What is a good annual return rate to use?
Historical stock market returns average about 7-10% annually before inflation, or about 6-7% after inflation. For conservative estimates, use 5-6%. For bonds or savings accounts, rates are typically lower at 2-4%.
Does the calculator account for taxes or inflation?
No, this calculator shows nominal (pre-tax, pre-inflation) returns. To account for inflation, subtract the expected inflation rate (typically 2-3%) from your expected return rate. Tax-advantaged accounts like IRAs and 401(k)s can help minimize tax impact.