Compound Interest Calculator
Determine how much your money can grow using the power of compound interest.
Built and maintained by Jefferson Almeida · Last updated
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Your projected balance
What compounding actually is
Compound interest means earning returns on your returns. Simple interest on $10,000 at 7% pays $700 every year forever. Compound interest pays $700 in year one, then $749 in year two (7% of $10,700), then $801, and so on - accelerating indefinitely.
Over one year the difference is nothing. Over thirty years, $10,000 at 7% simple interest reaches $31,000. Compounded annually, it reaches $76,123.
The formula
A = P(1 + r/n)^(nt)
- P - principal
- r - annual rate as a decimal
- n - compounding periods per year
- t - years
For a rough answer without any of this, the Rule of 72 estimates doubling time from the rate alone.
Compounding frequency matters less than people expect. $10,000 at 7% for 10 years yields $19,672 compounded annually and $20,136 compounded daily - a difference of about 2.4%. The rate and the time period do nearly all the work.
The shape of the curve
Compounding feels broken for a long time and then feels impossible. $500/month at 7%:
| Year | Contributed | Balance | Growth |
|---|---|---|---|
| 5 | $30,000 | $35,800 | $5,800 |
| 10 | $60,000 | $86,500 | $26,500 |
| 20 | $120,000 | $260,500 | $140,500 |
| 30 | $180,000 | $610,000 | $430,000 |
| 40 | $240,000 | $1,312,000 | $1,072,000 |
Note where the crossover happens. Around year 16-17, annual growth starts exceeding annual contributions - the portfolio begins earning more than you're putting in. Everything before that point feels like grinding. Everything after feels like momentum.
Most people who quit investing quit inside the first ten years, during the part that looks unrewarding.
Compounding works against you too
The same math drives credit card debt. A $5,000 balance at 24% APR compounding monthly, with no payments, becomes about $6,341 in one year and $12,935 in four years. This is the mechanism behind revolving debt that never seems to shrink - the debt payoff calculator runs the same math forward with payments applied.
FAQ
Does compounding frequency really make a big difference?
Less than most people expect. Moving from annual to daily compounding at the same rate typically changes the final balance by a small amount over most timeframes - the interest rate and how long you leave your money invested matter far more than how often interest compounds.
How is this different from the retirement calculator?
This tool is a general-purpose compound growth calculator - useful for savings accounts, CDs, or any goal with a fixed timeframe. The retirement calculator is built specifically around current age and retirement age. Both use the same underlying math.
What interest rate should I use?
Use the actual rate for savings accounts or CDs (check your bank's current APY). For long-run stock market investments, a common simplified assumption is 6-8% annually, though actual returns vary significantly year to year.
How often should I contribute?
Regularly beats optimally. Monthly automatic contributions capture nearly all the benefit and remove the decision from your hands.
Does this account for taxes?
No. Returns in a taxable account are reduced by taxes on dividends and capital gains. Tax-advantaged accounts (401(k), IRA, HSA) avoid this drag, which is a significant part of their value.
💡 Did you know?
Compound interest is old - really old. Clay tablets from ancient Babylon, dating back roughly 4,000 years, already contain interest calculations. You may have seen compound interest called "the eighth wonder of the world" and attributed to Albert Einstein - it's one of the most-repeated quotes in personal finance, but quote researchers have never found any reliable evidence Einstein actually said it.