Compound Interest Calculator

Discover the eighth wonder of the world - compound interest

Last reviewed on October 1, 2026.

Calculate Your Investment Growth

Starting amount
Added at the end of each month
Average yearly growth rate
How long you'll invest
How often interest is added to the balance
Applied once to total gains (e.g., taxable account)
Shows the result in today's dollars
Raise your monthly amount once a year

Understanding Compound Interest

The Power of Compounding

Albert Einstein allegedly called compound interest "the eighth wonder of the world." Whether he said it or not, the power of compounding is undeniable.

Simple Interest: You earn interest only on your principal
Compound Interest: You earn interest on your principal AND previously earned interest

Example: $10,000 at 7% for 30 years

  • Simple Interest: $31,000
  • Compound Interest: $76,123
  • Difference: $45,123!

The Rule of 72

Quick way to estimate doubling time:

72 ÷ Interest Rate = Years to Double

At 7% return: 72 ÷ 7 = ~10 years

Common Investment Scenarios

Frequently Asked Questions

For a single deposit, the formula is A = P × (1 + r/n)n×t, where P is the starting amount, r is the annual rate, n is how many times per year interest compounds, and t is the number of years.

Example: $10,000 at 5% compounded monthly for 10 years grows to $10,000 × (1 + 0.05/12)120 = $16,470.09.

This calculator also adds your monthly contributions at the end of each month and compounds them at the same rate, so it can handle regular saving as well as one-time deposits.

Historical average returns (before inflation):

  • S&P 500: ~10% annually (1957-2023)
  • Bonds: ~5% annually
  • Balanced Portfolio (60/40): ~7-8% annually
  • High-Yield Savings: moves with Federal Reserve rates; check current APYs

Use conservative estimates for planning: 6-7% for stocks, 3-4% for bonds.

More frequent compounding = higher returns, but the difference is smaller than you might think:

$10,000 at 5% for 10 years:

  • Annual: $16,288.95
  • Monthly: $16,470.09 (+$181)
  • Daily: $16,486.65 (+$198)

Most investment accounts compound daily, but the frequency matters less than the rate and time.

Research shows lump sum investing beats dollar-cost averaging (DCA) about 2/3 of the time. However:

  • Lump sum: Best for maximizing returns if you have the money now
  • DCA: Reduces volatility risk and provides psychological comfort
  • Reality: Most people invest from paychecks, making DCA natural

The best strategy is the one you'll stick with consistently.

Tax-advantaged accounts protect compound growth:

  • 401(k)/403(b): Tax-deferred growth, taxed on withdrawal
  • Roth IRA: Tax-free growth and withdrawals
  • Traditional IRA: Tax-deferred growth
  • Taxable account: Annual taxes on dividends/gains

Prioritize tax-advantaged accounts for long-term compound growth.