Compound Interest Calculator
See how your money grows over time with the power of compound interest. Calculate future value with regular contributions and visualize your wealth-building journey.
Quick Answer
How much will my money grow with compound interest?
With $10,000 invested at 7% annual return compounded monthly, you'll have $20,097 after 10 years—doubling your money. Adding $200/month increases that to $54,768. The Rule of 72: divide 72 by your interest rate to estimate doubling time (72÷7 = ~10 years).
Calculate exactly how compound interest grows your investments over time.
Key Takeaways
- Compound interest earns interest on interest, creating exponential growth over time
- Use the Rule of 72: divide 72 by your rate to estimate years to double your money
- Time is your greatest asset - starting 10 years earlier can double your final balance
- Regular contributions amplify compounding: even $100/month grows to $100,000+ over 30 years at 7%
Growth Projections
Investment Growth Over Time
Principal vs Contributions vs Interest
Understanding Compound Interest
What Is Compound Interest?
Compound interest is often called "interest on interest." Unlike simple interest, which only calculates interest on your initial principal, compound interest calculates interest on both your principal AND your accumulated interest.
This creates exponential growth - the longer your money compounds, the faster it grows.
The Formula
A = P(1 + r/n)nt
- A: Final amount (future value)
- P: Principal (starting amount)
- r: Annual interest rate (decimal)
- n: Times interest compounds per year
- t: Number of years
The Rule of 72
A quick way to estimate how long it takes to double your money:
Years to Double = 72 / Interest Rate
- At 6%: doubles in ~12 years
- At 8%: doubles in ~9 years
- At 10%: doubles in ~7.2 years
Time Is Your Greatest Asset
Starting early matters more than you might think. Here's an example:
- Early Starter: $200/month from age 25-35, then stops ($24,000 total invested)
- Late Starter: $200/month from age 35-65 ($72,000 total invested)
- At 7% return, the early starter can end up with MORE despite investing 3x less!
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is only calculated on the principal, compound interest grows exponentially over time. This is why Albert Einstein allegedly called it "the eighth wonder of the world."
More frequent compounding results in more interest earned. Daily compounding earns slightly more than monthly, which earns more than annually. However, the difference is often small - the interest rate and time period matter much more. For most savings accounts and investments, monthly or daily compounding is standard.
It depends on the type of account. High-yield savings accounts currently offer 4-5% APY. CDs may offer slightly more. For long-term investing in stocks, historical averages are 7-10% annually (with the S&P 500 averaging about 10% before inflation, or 7% after inflation). However, stock returns vary significantly year to year.
Four strategies to maximize compound growth:
- Start early: Time is the most powerful factor in compound growth
- Contribute regularly: Monthly contributions add up significantly
- Reinvest earnings: Don't withdraw dividends or interest - let them compound
- Minimize fees: High fees eat into your returns and compound negatively
APR (Annual Percentage Rate) is the simple interest rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding. For savings, APY gives you the true picture of what you'll earn. For loans, look at APR to understand the base rate. APY will always be equal to or higher than APR when interest compounds more than once per year.
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