Compound interest calculator
See how your savings grow when interest also earns interest. Time matters more than you might think.
What is compound interest?
With simple interest, only the initial deposit earns interest. With compound interest, each period’s interest is added to the balance and starts earning interest itself. The difference is small at first, but over the years the curve takes off: in the chart, the interest band ends up larger than everything you put in.
Cn = C0 · (1 + r)n
where C0 is the initial deposit, r the return per period and n the number of periods. With regular contributions, each one grows for the time it has left until the end. The calculator compounds monthly and adds contributions at the end of each month.
The rule of 72
A mental-math shortcut: divide 72 by the annual return in percent and you get the number of years it takes your money to double. At 6%, about 12 years; at 8%, about 9. The “Years to double” card computes it exactly with ln(2) / ln(1 + r).
Time beats amount
Try comparing: 200 a month for 40 years ends up well ahead of 400 a month for 20 years, even though you contribute the same in both cases. Starting early is the variable that weighs most in the result.
Don’t forget inflation
A dollar in 25 years will buy less than it does today. The dashed line shows the final value in today’s money, after the inflation rate you choose. If your return does not beat inflation, you are actually losing purchasing power even though the balance grows.
Past returns do not guarantee future returns. The calculations do not include fees or taxes on gains, and they are not financial advice.
Frequently asked questions
How much would I have investing 100 a month for 30 years?
At an average return of 7 % a year compounded monthly, about 122,000, of which only 36,000 are your own contributions: the rest is interest on interest. At 4 % it would be about 69,000. These are nominal figures, before tax and inflation, and real-world returns are never constant.
What is the difference between simple and compound interest?
With simple interest, interest is always calculated on the initial amount; with compound interest, it is added to the balance and earns interest itself. 10,000 at 5 % for 20 years grows to 20,000 with simple interest and to 26,533 with compound interest. The gap widens the longer the period.
What is the compound interest formula?
The final amount is A = P · (1 + r/n)^(n·t), where P is the initial principal, r the annual interest rate as a decimal, n the number of compounding periods per year and t the number of years. If you also make regular contributions, the future value of each one is added to that result, which is what the tool calculates.
What is the difference between APR and APY?
The nominal rate (APR) is the stated annual rate, without taking compounding into account. The annual percentage yield (APY or AER) expresses the actual return over one year, including the effect of compounding several times a year. A 12 % nominal rate compounded monthly is equivalent to an effective annual rate of 12.68 %.