Compound Interest Calculator
See how compound interest turns small, consistent investments into serious wealth. Visualize your money working for you.
The Magic of Compound Interest
Albert Einstein allegedly called compound interest "the eighth wonder of the world." Whether he said it or not, the math is undeniable: given enough time, compound interest can turn modest savings into substantial wealth.
THE COMPOUND INTEREST FORMULA
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
P = principal, r = rate, n = compounding frequency, t = time, PMT = periodic payment
Time Is Everything
Starting 10 years earlier can double your final wealth, even with the same monthly contribution.
Consistency Wins
Regular contributions compound too. $500/month at 7% becomes $567k in 30 years.
Interest on Interest
Eventually, your interest earns more than your contributions. That's when wealth accelerates.
The Power of Starting Early
Assumes 7% annual return. The 35-year-old needs to invest 2.2x more monthly to match the 25-year-old.
Frequently Asked Questions
What is compound interest?
Compound interest is when you earn interest on both your original investment AND the interest you've already earned. It's often called "interest on interest" and is the key to building wealth over time.
How does compounding frequency affect returns?
More frequent compounding (monthly vs annually) results in slightly higher returns because interest starts earning interest sooner. Our calculator uses monthly compounding, which is standard for most investments.
What return rate should I use?
For stocks, 7% is a common assumption (historical S&P 500 returns of ~10% minus 3% inflation). For bonds, 3-4% is typical. Use conservative estimates for planning.
Why does starting early matter so much?
Time is the most powerful factor in compound growth. Starting 10 years earlier can mean 2-3x more wealth at retirement, even with the same contributions. This is why "time in the market beats timing the market."
Should I use nominal or real (inflation-adjusted) returns?
Using real returns (7% instead of 10%) gives you a more accurate picture of future purchasing power. Our default 7% already accounts for ~3% inflation.
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Not financial advice. This calculator is for educational purposes only and does not constitute financial, tax, or investment advice. Results are estimates based on the inputs you provide and historical data. Consult a qualified financial advisor for personalized guidance. Read our editorial guidelines.