Compound interest calculator
Starting balance, monthly deposits, a rate, and time. The result splits what you put in from what compounding earned.
Why the curve bends
Run the default numbers above and look at the split: after 20 years, the interest earned exceeds everything you contributed. That crossover is the entire argument for starting early. The first decade of a compound-growth curve looks disappointingly flat; the growth lives in the years where interest is earning interest on itself.
Two rules of thumb worth knowing, both checkable with this calculator:
- The Rule of 72: money doubles in roughly 72 ÷ rate years. At 7%, about 10.3 years per doubling, which means a 40-year horizon holds four doublings: 16x.
- Contributions dominate early, returns dominate late. In year two, your deposit is most of the growth. In year twenty, the market's return on the pile is. This is why pausing contributions young costs more than it appears to.
One honest caveat: a fixed annual rate is a simplification. Real investment returns arrive lumpy (+20%, -12%, +8%), and the sequence matters when you are withdrawing. For accumulation-phase planning, the smooth-rate estimate here is the standard and reasonable tool.
Frequently asked questions
How does compound interest differ from simple interest?
Simple interest pays only on the original amount. Compound interest pays on the balance including past interest, so growth accelerates: $10,000 at 7% simple earns $7,000 in 10 years, but compounded monthly it earns about $10,097.
How much does compounding frequency matter?
Less than people expect. $10,000 at 7% for 10 years grows to $19,672 compounded annually and $20,097 compounded monthly, about a 2% difference in the final balance. The rate and the years matter far more.
When are monthly contributions credited?
This calculator adds contributions at the end of each month, the standard "ordinary annuity" convention that matches most savings and retirement account behavior.
What rate should I assume for long-term investing?
Historically the US stock market has returned around 10% per year before inflation and about 7% after. Savings accounts track much lower. Whatever you enter, remember it is an assumption, not a guarantee.