Compound Interest Calculator
See what a starting balance plus steady monthly contributions becomes over time — the math behind every retirement account.
Project your savings growth
How compound interest works
Compound interest means you earn returns on your returns. In month one, your money earns interest. In month two, that interest also earns interest — and the cycle repeats every period forever. For the first few years the effect looks unremarkable. Past year ten it starts to look like a mistake in the math. It isn't. It's the most reliable wealth-building force available to a regular person, and the only ingredient it truly requires is time.
This calculator combines two standard formulas: growth of a lump sum, and growth of a stream of monthly contributions (an annuity):
P is your starting amount, PMT the monthly contribution, r the monthly rate, and n the number of months.
A worked example
Start with $10,000, add $500 a month, and earn 7% a year for 20 years. Total contributions are $10,000 + ($500 × 240) = $130,000. The future value works out to about $302,000 — meaning roughly $172,000 of the final balance is growth, more than everything you put in. Run the same numbers for 30 years and the balance is about $691,000, of which $491,000 is growth. The third decade earns more than the first two combined. That is the entire argument for starting early.
The rule of 72
For quick mental math, divide 72 by your annual return to estimate how many years it takes money to double. At 7%, money doubles roughly every 72 ÷ 7 ≈ 10.3 years. At 9%, about every 8 years. It's an approximation, but a remarkably good one for rates under 15%.
What rate should you assume?
Nobody can promise a return. For long-term planning, many people model diversified stock-market investments at 6–8% annually before inflation, based on long historical averages — with the understanding that real results arrive in lumpy, unpredictable years, not a smooth line. High-yield savings accounts pay whatever today's rates are, with no growth risk but less long-term growth. Model a range, not a single number, and remember this calculator shows projections, not promises.
Frequently asked questions
Does this account for inflation?
No — results are in future dollars. A rough way to see 'today's dollars' is to subtract expected inflation from your return: at 7% growth and 3% inflation, enter 4% to approximate purchasing power.
Does this account for taxes?
No. In tax-advantaged accounts like a 401(k) or IRA, growth compounds untaxed until withdrawal (or tax-free in Roth accounts). In a regular brokerage account, taxes on dividends and realized gains will reduce the effective return.
Monthly vs. annual compounding — does it matter?
A little. More frequent compounding helps slightly: $10,000 at 7% for 20 years is about $38,700 compounded annually versus about $40,300 compounded monthly. This calculator compounds monthly, which matches how most accounts work.
Is 7% a realistic return?
It's a common long-term planning assumption for diversified stock investments based on historical averages, but it is not guaranteed and individual years vary wildly. Conservative planners model 5–6%; cash savings should use current bank rates.
What matters more — the rate or the contribution?
Early on, contributions dominate; you can't compound your way out of not saving. After 15–20 years the rate takes over. The practical answer: maximize contributions first, keep fees low so the rate isn't eroded, and give it time.