Compound Interest Calculator
Visualize the power of time and compound growth
Compound Interest Calculator
Starting amount.
Amount added each month.
Annual return (e.g., 7-10% for stocks).
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Open an AccountOur free Compound Interest Calculator shows you how your money can grow over time through the power of compounding. By reinvesting your earnings, you earn interest on your interest, which can turn small, regular contributions into significant wealth over long periods.
How to Use This Compound Interest Calculator
- 1Enter your initial starting amount.
- 2Enter how much you plan to contribute each month.
- 3Set the number of years you plan to let the money grow.
- 4Enter an estimated annual interest rate (e.g., 8% for stock market average).
- 5Click Calculate to see your projected future balance.
Understanding Your Results
The results will show you your Total Future Balance, how much comes from your contributions versus the interest earned. The power of compound interest is most visible in the later years, where interest often exceeds your contributions.
Frequently Asked Questions
Compound interest is 'interest on interest'. It means you earn interest not only on your initial money (principal) but also on the interest you've already earned. Over time, this leads to exponential growth of your money.
The Rule of 72 is a quick way to estimate how long it will take for your investment to double. Divide 72 by your annual interest rate. For example, at an 8% return, your money doubles in about 9 years (72 ÷ 8 = 9).
Compounding frequency determines how often interest is added to your account. Common frequencies are Daily, Monthly, Quarterly, and Annually. More frequent compounding leads to slightly higher returns. Most savings accounts compound daily or monthly.
Yes, this calculator assumes you make contributions at the end of each month and that interest is compounded monthly, which reflects how most high-yield savings accounts and investment plans work.
If you stop contributing, your money will still grow thanks to the interest earning interest on the balance you've already built up. However, the growth will be slower than if you continued adding new funds.
For stock market investments (like an S&P 500 index fund), historically average returns are around 7-10% annually after inflation adjustments. For High-Yield Savings Accounts (HYSA), rates fluctuate but are typically around 3-5% in standard economies.
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal *plus* accumulated interest. Simple interest grows linearly, while compound interest grows exponentially.
Generally, yes. Interest earned in bank accounts is taxed as income. Investment gains are often taxed as capital gains. However, growth in tax-advantaged accounts like 401(k)s or IRAs may be tax-deferred or tax-free.