Compound Interest Calculator
Calculate investment growth with compound interest.
Yearly breakdown
| Year | Contributions | Interest | Total |
|---|---|---|---|
| 1 | $16,000 | $1,055 | $17,055 |
| 2 | $22,000 | $2,695 | $24,695 |
| 3 | $28,000 | $4,970 | $32,970 |
| 4 | $34,000 | $7,932 | $41,932 |
| 5 | $40,000 | $11,637 | $51,637 |
| 6 | $46,000 | $16,148 | $62,148 |
| 7 | $52,000 | $21,531 | $73,531 |
| 8 | $58,000 | $27,859 | $85,859 |
| 9 | $64,000 | $35,210 | $99,210 |
| 10 | $70,000 | $43,669 | $113,669 |
Compound interest calculator: project your money's growth
Albert Einstein supposedly called compound interest the "eighth wonder of the world". Unlike simple interest, where you only earn interest on your initial capital, compound interest generates earnings on previous earnings, creating a snowball effect that accelerates your money's growth exponentially over time.
Our calculator lets you simulate different investment scenarios by combining four key variables: initial capital, monthly contributions, expected annual interest rate, and investment time horizon. The annual breakdown shows how accumulated interest grows each year.
For typical stock market investments like the S&P 500, the historical average rate has been approximately 10% annually before inflation (7% adjusted for inflation). Use this calculator to visualize how your regular contributions can become a significant amount over time.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the initial capital. If you invest $10,000 at 10% simple, you earn $1,000 every year. With compound interest, the interest is reinvested: the first year you earn $1,000, but the second year you earn interest on $11,000, generating $1,100, and so on. In the long run, the difference is enormous.
What is the Rule of 72?
The Rule of 72 is a mathematical shortcut to estimate how long it will take your money to double. Divide 72 by the annual interest rate. For example, at 8% annually, your money doubles in approximately 72/8 = 9 years. At 12%, it doubles in 6 years. It is a useful approximation for quick mental calculations.
Does the calculator consider taxes or inflation?
No, the results show nominal growth without deducting taxes or inflation. To get a more realistic estimate of future purchasing power, you can subtract the expected inflation (typically 3-4% annually) from your interest rate. For example, if you expect a 10% return and 3% inflation, use 7% in the calculator for an adjusted result.
Want to learn more? Read our complete guide →