Watch your money compound on itself.
Enter a starting balance, a rate, how often it compounds and how long it grows. See the final amount, the interest your interest earns, your effective yield and how the whole thing builds year by year.
Your money
Deposits are added at the end of each period and start compounding right away.
What your numbers mean
How the balance grows
Where the final balance comes from
Principal vs deposits vs interest
The scorecard
Does compounding frequency matter?
Same starting amount, rate, time and deposits, compounded at different speeds. Faster compounding pays a little more, and the gap widens with the rate and the years.
Year-by-year growth
Each row shows the balance at the end of that year, everything you have put in so far, and how much of the balance is pure interest.
| Year | Deposited this year | Total contributions | Interest earned | Balance |
|---|
Compound interest, explained
How Future Value Is Calculated
Future value is calculated by applying a growth rate to a present sum over a specified number of periods using the formula FV = PV × (1 + r)^n. This formula accounts for compound interest, where earnings in each period are added to the principal and earn returns in subsequent periods. For investments with regular contributions, the future value of an annuity formula is added to account for each periodic deposit growing at the specified rate. Understanding this calculation helps you set clear financial goals by projecting exactly how much your savings and investments will be worth at a target date in the future.
The Power of Compound Interest
Compound interest has been called the eighth wonder of the world because of its ability to accelerate wealth creation exponentially over time. The key to compounding is that you earn returns not only on your original investment but also on all previously accumulated interest. A $10,000 investment earning 8% annually grows to $21,589 in 10 years, $46,610 in 20 years, and $100,627 in 30 years, the growth accelerates dramatically in later years. This is why starting to invest early, even with small amounts, can produce significantly larger results than investing larger sums later in life.
How Monthly Contributions Accelerate Growth
Adding regular monthly contributions to your investment dramatically increases the final value compared to a one-time lump sum investment alone. For example, a $10,000 initial investment at 8% annual return grows to about $46,610 over 20 years, but adding just $200 per month to that same investment brings the total to approximately $164,000. The power of consistent contributions comes from dollar-cost averaging and the compounding effect on each successive deposit. Even modest monthly amounts, $100, $200, or $500, can build substantial wealth over decades, making automated contributions one of the most effective wealth-building habits you can develop.
Setting Realistic Return Expectations
Setting realistic return expectations is crucial for meaningful financial planning and avoiding disappointment. The U.S. stock market has historically returned approximately 10% annually before inflation and about 7% after inflation, as measured by the S&P 500 over the past century. Bond returns have averaged 5% to 6% before inflation, while savings accounts and CDs currently offer 4% to 5% but have historically averaged much less. A diversified portfolio of stocks and bonds might reasonably target 6% to 8% annual returns after inflation, and using conservative estimates in your planning provides a built-in safety margin for achieving your financial goals.
Common questions
What is compound interest?
Compound interest is interest earned on both the original principal and previously accumulated interest. Unlike simple interest (calculated only on the principal), compound interest creates exponential growth. Albert Einstein reportedly called it the eighth wonder of the world.
How much does compound interest grow $10,000 over 20 years?
At 7% annual return compounded monthly, $10,000 grows to about $40,387 in 20 years with no additional contributions. Add $300/month and it grows to approximately $196,000. The contributions total $82,000, but compound interest adds another $114,000.
What rate of return should I assume?
Use 7% for a conservative, inflation-adjusted stock market return. Use 10% for nominal (before inflation) returns. For bonds, use 4%-5%. For savings accounts, use 4%-5% currently. Your actual rate depends on your investment mix.
Why is starting early so important with compound interest?
Because of exponential growth, the earliest dollars contribute the most. Investing $300/month from age 25 to 65 at 7% yields about $745,000. Starting at 35 yields only $365,000, less than half, even though you only contributed $36,000 less.
Does compound interest work against me on loans?
Yes. Compound interest on debt means you pay interest on interest. Credit cards compound daily at 20%+ APR, which is why balances grow rapidly. This is why paying off high-interest debt is often the best "investment" you can make.
Estimates for planning only. A fixed rate never repeats in the real world, returns swing year to year, and taxes, fees and inflation all take a bite. Use conservative numbers and treat this as a guide, not a promise.