About this calculator
Compound interest means earning interest on your interest. Money left invested grows faster each year because the base keeps getting bigger — the growth curve bends upward instead of running in a straight line. It is the single most important concept in long-term saving, and the reason starting early beats contributing more, later.
This calculator assumes a steady rate of return and contributions at a regular rhythm. Real investments fluctuate, so treat the result as a projection of the math, not a promise about markets.
How to use it
- Enter what you have now as the starting amount (use 0 if you are starting from scratch).
- Add a monthly contribution you can sustain.
- Set an assumed annual return — savings accounts pay far less than long-run stock market averages, so pick a rate that matches where the money actually sits.
- Watch the year-by-year table: the year interest earned overtakes what you put in is the moment compounding takes over.
The formula
FV is the future value, P the starting amount, C the contribution per compounding period, r the rate per period (annual rate ÷ periods per year) and n the total number of periods. The first term grows your starting amount; the second grows the stream of contributions.
Worked example
Start with $10,000, add $200 a month, and earn 7% a year compounded monthly. After 20 years you have put in $58,000 — but the balance is $144,572.72. The other $86,572.72 is interest that your money earned by itself, and it keeps accelerating: more than half of it arrives in the final seven years.
Frequently asked questions
How often should interest compound?
More frequent compounding grows money slightly faster. Daily compounding beats monthly, which beats annual — but the differences are small next to the effect of the rate, the time span and your contributions. On $10,000 at 7% for 20 years, daily compounding adds only about $160 versus monthly.
What return should I assume?
Use the rate that matches the account. High-yield savings accounts have recently paid around 4%–5%; long-run US stock market returns have averaged roughly 7% after inflation (about 10% before it). Bond-heavy portfolios sit in between. When in doubt, run the calculator at a pessimistic and an optimistic rate and plan around the lower one.
What is the Rule of 72?
Divide 72 by your annual return to estimate how many years it takes money to double. At 7%, that is about 10.3 years; at 4%, about 18 years. It is a shortcut, not exact math, but it makes the power of compounding easy to feel.
Does this account for taxes or inflation?
No. The projection is in nominal terms before taxes and fees. To think in today's dollars, subtract expected inflation (often assumed around 2%–3%) from your return rate and run the calculator again.