Compound Interest Calculator
Watch your money grow: enter a starting amount, monthly contributions, and return to see your future value — and how much of it is pure compound growth versus your own deposits.
Assumes a fixed annual return compounded monthly — the stock market's long-run average is around 7–10% before inflation.
- Your contributions$130,000.00
- Compound growth$170,850.72
- Future value$300,850.72
Time does the heavy lifting: the money you invest in the first 10 years earns interest for the longest, so starting early beats investing more later. Try 10 vs. 30 years above to see compounding's curve.
How the math works
Compound interest means your returns earn returns: each period's growth is calculated on the balance plus all previously earned interest, not just your original deposits. The future value formula is: FV = starting amount × (1+r)^n + monthly contribution × (((1+r)^n − 1) ÷ r), where r is the monthly rate (annual return ÷ 12) and n is the total number of months.
Two forces drive the result, and they trade places over time. In the early years, your contributions do almost all the work — the balance is small, so even a good return adds little. Later, compounding takes over: on a large balance, the same percentage return adds far more dollars than your monthly deposits. That crossover is why time matters more than timing — starting ten years earlier usually beats contributing more later, because early dollars get the most compounding periods.
One reality check: these are nominal returns. Inflation quietly taxes them — at 3% annual inflation, a 7% nominal return is roughly a 4% real return in today's purchasing power. Project in nominal dollars, but judge the result against what things will cost when you actually spend the money.
Worked example
Start with $5,000, add $300 every month, and earn 7% annually compounded monthly for 30 years. The future value is about $406,574. Your total contributions are only $113,000 ($5,000 plus $300 × 360 months) — the remaining $293,574 is pure compound growth, roughly 72% of the final amount. Notice how back-loaded it is: after 15 years the balance is only about $109,000, meaning roughly 73% of the final value arrives in the second 15 years. That is compounding's signature — slow, then sudden — and why interrupting it early is so costly.
What to watch for
- Starting early beats investing more later. A dollar invested at 25 has 40 years to compound; the same dollar at 35 has 30. Early contributions do disproportionately more work — even small ones.
- Automate contributions. Money moved automatically on payday gets invested before lifestyle creep claims it; consistency matters more than perfectly timing the market.
- Mind the fees. A 1% annual fee on a 7% return silently takes about a seventh of your growth every year — over 30 years that can cost six figures. Prefer low-cost funds.
- Keep an emergency fund separate. Compounding only works on money that stays invested; raiding long-term savings for short-term needs resets the clock.
- Judge projections in real terms. Subtract expected inflation (roughly 2–3%) from your assumed return to see purchasing power, and use conservative return assumptions — projections are illustrations, not promises.
Frequently asked questions
What is compound interest?
It's interest earning interest: your returns get reinvested, so next period's growth is calculated on a bigger balance. Over decades, compounding can contribute more to your total than your own deposits.
How often is interest compounded here?
This calculator compounds monthly, which matches most savings accounts and is the standard assumption for investment projections. More frequent compounding grows money slightly faster, but the difference is small compared to rate and time.
What annual return should I assume?
The U.S. stock market has averaged roughly 7–10% per year before inflation over long periods. Savings accounts and CDs are far lower (often under 5%). Use a conservative number — projections are not guarantees.
Is it better to invest more or start earlier?
Starting earlier usually wins. Money invested in your 20s compounds for decades longer than money invested in your 40s — early dollars do disproportionately more work, which is why even small early contributions matter so much.
What is the rule of 72?
A quick mental shortcut: divide 72 by your annual return to estimate the years needed to double your money. At 7%, money doubles roughly every 10.3 years — so $10,000 becomes about $20,000 in a decade and about $40,000 in two, before any contributions.
How does inflation change the picture?
A 7% nominal return with 3% inflation is only about 4% in real purchasing power. Over 30 years the difference is enormous: $406,574 in nominal dollars is roughly $167,000 in today's dollars at 3% inflation. Always sanity-check projections against inflation.
Do taxes reduce compound growth?
In taxable accounts, yes — taxes on dividends and gains each year drag on compounding. Tax-advantaged accounts (like 401(k)s and IRAs) let growth compound untouched until withdrawal, which is a large part of their advantage. Contribution limits and withdrawal rules apply, so check current IRS guidelines or talk to a licensed professional.
What happens if I stop contributing for a few years?
The existing balance keeps compounding — you lose only the missed contributions and their future growth, not the growth already earned. Pausing for five years mid-plan costs far less than starting five years late, because early dollars have the most time. Resume as soon as you can.