📈 Free Calculator

Compound Interest
Calculator

See how your savings or investments grow exponentially over time. Includes monthly contributions, inflation adjustment, and a full year-by-year breakdown.

📈

Compound Interest Calculator

Enter your details to see your investment grow over time.

$
%
0%15%30%
yrs
12550 yrs
$
%
Final Balance
—
—
Total Contributed
—
Principal + deposits
Interest Earned
—
—
Growth Over Time
Year-by-Year Breakdown
YearBalanceContributedInterestReturn

What is Compound Interest?

Compound interest is the process of earning interest on both your initial principal and the accumulated interest from previous periods. Unlike simple interest — which only earns on the original amount — compound interest grows exponentially, making it the most powerful force in personal finance.

Albert Einstein is often (apocryphally) quoted as calling it "the eighth wonder of the world." Whether he said it or not, the math is undeniable: small amounts invested early grow into substantial wealth over time.

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

Where A = final amount, P = principal, r = annual rate, n = compounds/year, t = years, PMT = monthly contribution.

How to Use This Calculator

Enter your starting investment amount, set your expected annual return, choose how often interest compounds, and add any monthly contributions. Hit Calculate to see your projected growth, including an inflation-adjusted real value.

  • Initial Investment: The lump sum you're starting with today
  • Annual Rate: Your expected yearly return. S&P 500 historical average is ~7% inflation-adjusted
  • Compound Frequency: How often interest is calculated. Monthly is most common for investments
  • Monthly Contribution: Regular deposits that dramatically accelerate growth
  • Inflation Rate: Used to show real (purchasing-power-adjusted) final value

The Power of Starting Early

The single most impactful variable in compound interest is time. Consider two investors who both contribute $300/month at 7% annual return:

  • Investor A starts at age 25 and retires at 65 → ~$798,000
  • Investor B starts at age 35 and retires at 65 → ~$364,000

Investor A contributed only $36,000 more but ended up with $434,000 more — purely because of the extra 10 years of compounding. This is the compound interest effect in action.

Frequently Asked Questions

What annual return rate should I use?
For long-term stock market investing, 7% (inflation-adjusted) is a commonly cited conservative estimate based on historical S&P 500 performance. For savings accounts, use your actual quoted APY, which is typically 1–5% in 2026. For bonds, 3–5% is reasonable.
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the stated rate before compounding. APY (Annual Percentage Yield) accounts for compounding within the year. A 6% APR compounded monthly gives an APY of about 6.17%. Banks typically advertise APY for savings accounts and APR for loans.
How often should interest compound for maximum growth?
More frequent compounding means slightly higher returns. Daily compounding yields marginally more than monthly, which yields more than annual. In practice, the difference between daily and monthly is very small — going from annual to monthly compounding has a much larger impact than daily vs. monthly.
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, your money doubles in ~12 years (72÷6). At 9%, it doubles in ~8 years (72÷9). This works well for rates between 6% and 10%.
Does compound interest work for debt too?
Yes — and this is why credit card debt is so dangerous. A $5,000 credit card balance at 20% APR compounded monthly grows to over $8,000 in just 3 years if you make no payments. The same math that builds wealth can destroy it when working against you.