Compound Interest Calculator
Discover the power of compound interest with our free calculator. See exactly how your investments will grow over time with regular contributions. Visualize your financial future with detailed year-by-year breakdowns and scenario comparisons. Perfect for retirement planning, college savings, and long-term investment goals.
| Year | Starting Balance | Contributions | Interest | Ending Balance |
|---|---|---|---|---|
| 1 | $10,000.00 | $2,400.00 | $919.98 | $13,319.98 |
| 2 | $13,319.98 | $2,400.00 | $1,195.54 | $16,915.52 |
| 3 | $16,915.52 | $2,400.00 | $1,493.96 | $20,809.48 |
| 4 | $20,809.48 | $2,400.00 | $1,817.16 | $25,026.64 |
| 5 | $25,026.64 | $2,400.00 | $2,167.18 | $29,593.83 |
This calculator provides estimates only. Actual investment returns may vary and are not guaranteed. Consult with a financial advisor for personalized investment advice.
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How to Use
- 1 Enter starting amount — Input your initial investment (principal). This is the money you're starting with today.
- 2 Add regular contributions — Include monthly, quarterly, or annual contributions. Even small amounts add up significantly over time due to compound interest.
- 3 Set interest rate — Enter your expected annual return. Conservative: 4-6%, Moderate: 6-8%, Aggressive: 8-12%. Historical S&P 500 average is about 10%.
- 4 Choose time period — Select how many years you plan to invest. The longer the period, the more dramatic the compound growth.
- 5 Review results — See your future value, total interest earned, and return on investment. The breakdown shows how much came from contributions vs compound interest.
- 6 Compare scenarios — Try different combinations to see how changing contributions, interest rates, or time periods impacts your results.
Frequently Asked Questions
What is compound interest?
Compound interest is 'interest on interest' - you earn returns not just on your initial investment, but also on your accumulated earnings. For example: If you invest $1,000 at 10% annual return, after year 1 you have $1,100. In year 2, you earn 10% on $1,100 (not just the original $1,000), giving you $1,210.
How much does compound interest really matter?
It matters enormously over long time periods. $10,000 invested at 8% annual return becomes $46,610 after 20 years with compound interest, but only $26,000 with simple interest. That's $20,610 MORE just from compounding!
Why is starting early so important?
Time is the most powerful factor. If you invest $200/month starting at age 25 until 65 (40 years) at 8% return, you'll have $622,000. Start at age 35 instead (30 years), and you'll only have $298,000 - that's $324,000 less despite only a 10-year difference!
What's a realistic interest rate to expect?
It depends on your investment type: High-yield savings: 4-5%, Bonds: 3-6%, Balanced mutual funds: 6-8%, Stock market (S&P 500 historical average): ~10%, Individual stocks: Highly variable. Higher returns usually mean higher risk.
How often should interest compound?
More frequent compounding is better, but the difference is relatively small. At 8% over 20 years on $10,000: Annually: $46,610, Monthly: $47,931, Daily: $48,051. Most savings accounts compound daily or monthly.
How does inflation affect my returns?
Inflation erodes purchasing power. If you earn 8% but inflation is 3%, your 'real return' is only about 5%. Enable our inflation adjustment to see real vs nominal returns.