Compound Interest Calculator
Calculate investment growth over time
Growth visualization
Monthly contributions
Compounding frequency
Year-by-year breakdown
Albert Einstein allegedly called compound interest the "eighth wonder of the world." Whether he actually said it or not, the principle behind it has made more ordinary people wealthy than any get-rich-quick scheme ever invented.
Here's the uncomfortable truth: if you're 25 and invest $500/month at 7% returns, you'll have over $1.1 million by 65. If you wait until 35 to start the same investment, you'll have only $567,000. That extra decade of waiting cost you over half a million dollars—and you never invested a penny more.
Time and compound interest are the two most powerful forces in building wealth. This calculator shows you exactly how they work together.
What is a Compound Interest Calculator?
A Compound Interest Calculator projects how your money grows over time when interest is earned on both your original investment (principal) and on the interest already accumulated.
Unlike simple interest (which only earns on the principal), compound interest creates exponential growth—the longer your money compounds, the faster it accelerates.
The formula:
A = P(1 + r/n)^(nt) + PMT Ă— [((1 + r/n)^(nt) - 1) / (r/n)]
Where:
- A = Final amount
- P = Principal (starting amount)
- r = Annual interest rate (decimal)
- n = Compounding frequency per year
- t = Time in years
- PMT = Regular contribution amount
Compound interest grows exponentially, not linearly. The ^(nt) exponent is
where the magic happens. This is why your last 10 years of investing typically
generate more wealth than your first 20.
Why People Actually Need This Tool
Seeing your potential wealth 30 years out—in concrete numbers—creates an emotional connection that abstract financial advice never can. People who visualize their future wealth save more.
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Retirement planning — Know exactly how much you need to save monthly to hit your retirement number. A target of $1 million sounds impossible until you see how $400/month at 8% grows.
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Goal-based saving — Planning for a house down payment, college fund, or major purchase? See when you'll reach your target at current savings rates.
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Comparing investment options — A 1% difference in returns seems trivial until you see it compounds to tens of thousands over decades.
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Understanding the cost of waiting — Visualize the exact dollar penalty for delaying investment by 5 or 10 years.
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Contribution optimization — Find the "sweet spot" between contribution amount and goal timeline that fits your budget.
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Inflation-adjusted planning — Use real returns (nominal return minus inflation) to see purchasing power, not just raw numbers.
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Teaching financial literacy — Show children or students how early saving creates permanent wealth advantages.
How to Use the Compound Interest Calculator
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Enter your starting amount — This is your initial investment (principal). Even $0 works if you're starting fresh with just contributions.
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Set your contribution — Monthly additions are the engine of wealth building for most people. Even $100/month makes a dramatic difference.
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Choose the interest rate — Use realistic returns: 7% for stock market average (after inflation), 4-5% for conservative bonds, 3-4% for savings accounts.
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Select compounding frequency — Monthly is standard for most investments. Daily vs. monthly makes only a marginal difference.
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Set the time period — This is the most important variable. 30+ years unlocks the full power of compounding.
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Review the breakdown — See your total contributions vs. interest earned. That interest number is "free money" from compound growth.
| Investment Type | Typical Return | Risk Level | Best For |
|---|---|---|---|
| High-Yield Savings | 4-5% | Very Low | Emergency fund |
| Bonds/Bond Funds | 4-6% | Low | Conservative investors |
| Balanced Funds | 6-8% | Medium | Moderate risk tolerance |
| Stock Index Funds | 8-10% | Medium-High | Long-term growth |
| Individual Stocks | Varies | High | Experienced investors |
Historical averages help with planning, but the market can underperform or outperform any projection. Use this calculator for directional guidance, not guarantees.
Real-World Use Cases
1. The Early Starter vs. Late Starter
Context: Two friends, both planning to retire at 65. Alex starts at 25, Jordan starts at 35. Both invest $500/month at 7%.
Problem: Jordan assumes they can "catch up" by saving more later.
Solution: Calculate both scenarios:
- Alex (40 years): $1,197,811 final balance ($240,000 contributed)
- Jordan (30 years): $567,000 final balance ($180,000 contributed)
Outcome: Alex contributed just $60,000 more but ends with $630,000 more. Jordan would need to save $1,057/month to match Alex—more than double.
2. The 529 College Fund
Context: New parents want to save for their child's college education (18 years away).
Problem: College costs ~$200,000 for a 4-year private university. Can they afford to save enough?
Solution: Calculate: $500/month at 6% for 18 years = $193,000. Add $50/month more = $212,000.
Outcome: They set up automatic $550/month contributions, knowing they'll hit their target with reasonable market assumptions.
3. The Emergency Fund Builder
Context: A recent graduate has $0 savings and wants a $15,000 emergency fund.
Problem: Saving $15,000 seems overwhelming on an entry-level salary.
Solution: At $400/month in a 4.5% high-yield savings account, they reach $15,000 in ~34 months (under 3 years). The interest adds ~$700 "free" dollars.
Outcome: The timeline feels achievable, and they automate the transfer immediately.
4. Lump Sum vs. Dollar-Cost Averaging
Context: Someone receives a $50,000 inheritance and debates investing it all immediately vs. spreading over 12 months.
Problem: They fear investing at a market peak.
Solution: Calculate both:
- Lump sum at 8% for 20 years: $233,000
- DCA ($4,167/month for 12 months) then grows 19 years: $217,000
Outcome: Statistically, lump sum wins ~67% of the time. But DCA provides psychological comfort if they're risk-averse.
5. The Millionaire Math
Context: A 30-year-old wants to be a millionaire by 60.
Problem: They don't know if it's realistic without a huge salary.
Solution: Calculate: At 8% returns, investing $678/month for 30 years = $1,000,000. That's achievable for many middle-class earners.
Outcome: They set $700/month auto-invest to their 401(k), knowing they're on track—no lottery ticket required.
6. The Power of Employer Match
Context: A company offers 401(k) matching up to 5% of salary ($3,000/year match for a $60,000 salary).
Problem: The employee considers opting out to have more take-home pay.
Solution: Show them: $6,000/year ($3,000 contribution + $3,000 match) at 8% for 30 years = $680,000. Versus $3,000/year alone = $340,000.
Outcome: The "free" match doubles their retirement fund. They immediately opt in.
7. Inflation Reality Check
Context: Someone sees their $500,000 projection and celebrates.
Problem: They forget about inflation eroding purchasing power.
Solution: Using 3% inflation, that $500,000 in 30 years has the purchasing power of ~$206,000 today. For real target planning, use post-inflation returns (7% nominal - 3% inflation = 4% real).
Outcome: They adjust contributions upward or expectations downward to account for reality.
Common Mistakes and How to Avoid Them
Assuming 12% returns because "the market was great last year" sets you up for disappointment. Plan conservatively; celebrate if you beat the plan.
Privacy and Data Handling
This Compound Interest Calculator runs entirely in your browser. Your financial projections stay completely private.
- No investment amounts or projections are sent to any server.
- No cookies or tracking on your calculations.
- No account required.
- Works offline once the page loads.
Plan your financial future with complete privacy. We never see your numbers.
Conclusion
Compound interest is the closest thing to financial magic that exists. It rewards patience, punishes procrastination, and treats everyone equally—regardless of income level.
The math is simple: start early, contribute consistently, let time do the heavy lifting. This calculator shows you exactly what's possible with the numbers specific to your situation.
Whether you're planning retirement, saving for a goal, or teaching someone about investing, the visualization of compound growth creates clarity. Use it to set realistic targets, stay motivated, and make informed decisions.
Your future self will thank you for the months and years you didn't wait.