Compound Interest Calculator

A compound interest calculator shows you the magic that happens when your money makes money, and then that money makes more money. Unlike simple interest, which only earns returns on your initial investment, compound interest earns returns on your returns. Albert Einstein allegedly called it the eighth wonder of the world, and while we can't confirm he said that, the sentiment is spot-on. This calculator reveals how starting early and staying consistent can turn modest contributions into substantial wealth. It's the financial equivalent of a snowball rolling downhill—it starts small but picks up serious momentum over time.

Start with your initial investment amount—this is your starting principal. Then enter how much you plan to add regularly (monthly, quarterly, or annually). Next, input your expected annual interest rate. For savings accounts, this might be 4-5%; for stock market investments, you might use 8-10%. Choose how often interest compounds—daily, monthly, quarterly, or annually. More frequent compounding means faster growth, though the difference between daily and monthly is usually negligible. Finally, set your time horizon. This is where the magic happens. Run the calculation for different timeframes to see how dramatically time affects your results. Even an extra five years can mean tens of thousands more.

The results show your future value—what your investment will be worth at the end of your chosen period. The calculator typically breaks this down into your total contributions (money you put in) and total interest earned (money your money made). That second number is the exciting one. You'll see how compound interest accelerates over time. In early years, most growth comes from your contributions. But later, interest earnings can dwarf your contributions. The calculator often includes a chart showing this visually. You'll notice the curve gets steeper each year. That's compounding at work. Pay attention to how changes in interest rate or contribution frequency affect outcomes—even small differences compound into big numbers over decades.

Imagine you're 22 and just landed your first real job. You decide to invest $300 monthly in a low-cost index fund. Your starting balance is $1,000. Historically, the stock market returns about 10% annually, but let's be conservative and use 8.5%. You plan to do this for 40 years until retirement at 62. Running the numbers, you'd contribute $145,000 total over those four decades. But thanks to compound interest, your account would grow to approximately $1,080,000. That means $935,000 came from investment returns, not your contributions. Now here's the kicker: if you waited until age 32 to start (just 10 years later) with the same monthly contribution, you'd end up with only about $447,000. Those first 10 years alone account for over $630,000 in final value. That's why starting early is so powerful—time is your biggest asset.