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Compound Interest Calculator

See how your money grows over time

Future Value

$300,851

Total Invested

$130,000

Interest Earned

$170,851

Multiplier

2.31x

$
$
%
1 year20 years40 years

Future Value

$300,851

after 20 years

Total Invested

$130,000

Interest Earned

$170,851

Money Multiplier

2.31x

Effective Rate

7.23%

Rule of 72

At 7% interest, your money doubles every 10.3 years

Investment Breakdown

Growth Over Time

Maximize Your Growth

  • Start early -- time is your biggest advantage
  • Increase contributions when you get raises
  • Choose accounts with higher compounding frequency
  • Reinvest dividends and interest automatically

Frequently Asked Questions

Q

What is compound interest and how does it work?

Compound interest is interest calculated on both the initial principal AND accumulated interest from previous periods. Unlike simple interest (calculated only on principal), compound interest creates exponential growth. Example: $10,000 at 7% for 30 years grows to $76,123 with compound interest vs $31,000 with simple interest.

  • Simple interest: Interest only on original principal
  • Compound interest: Interest on principal + accumulated interest
  • The "interest on interest" effect accelerates growth over time
  • More frequent compounding = slightly higher returns
$10,000 at 7%Simple InterestCompound InterestDifference
10 years$17,000$19,672+$2,672
20 years$24,000$38,697+$14,697
30 years$31,000$76,123+$45,123

Compound interest is why starting to invest early matters so much. Each year, your previous gains earn their own gains. Albert Einstein allegedly called it the "eighth wonder of the world" - whether or not he said it, the math is undeniably powerful.

Q

How is compound interest calculated?

Compound interest formula: A = P(1 + r/n)^(nt), where P = principal ($10,000), r = annual rate (0.07 for 7%), n = compounds per year (12 for monthly), t = years (10). Example: $10,000 at 7% monthly for 10 years: A = 10,000(1 + 0.07/12)^(12×10) = $20,097.

  • A = Final amount (principal + interest)
  • P = Principal (initial investment)
  • r = Annual interest rate (as decimal: 7% = 0.07)
  • n = Compounding frequency per year (12 = monthly)
  • t = Time in years

For investments with regular contributions, the formula becomes more complex (future value of annuity). Our calculator handles this automatically - just enter your initial amount, monthly contribution, rate, and time period.

Q

How often should interest compound?

More frequent compounding yields higher returns, but the difference diminishes. Daily vs monthly compounding adds only ~0.1% annually. At 7% annual rate, $10,000 over 10 years: Annual compounding = $19,672, Monthly = $20,097, Daily = $20,138. Focus more on rate than frequency.

  • Savings accounts: Usually daily or monthly compounding
  • CDs: Often monthly or quarterly
  • Bonds: Typically semi-annual
  • Difference between daily and monthly is minimal
Compounding Frequency$10,000 at 7% for 10 yearsEffective Annual Rate
Annual (1x/year)$19,6727.00%
Quarterly (4x/year)$20,0167.19%
Monthly (12x/year)$20,0977.23%
Daily (365x/year)$20,1387.25%
Q

What is the Rule of 72 for doubling money?

The Rule of 72 estimates how long it takes to double your money: Years to double = 72 ÷ interest rate. At 6% return, money doubles in 12 years (72÷6). At 8% return, it doubles in 9 years (72÷8). At 12% return, it doubles in just 6 years.

  • Quick mental math for investment growth
  • Works for any rate between 2-15% with good accuracy
  • Rule of 115: Years to triple your money (115÷rate)
  • Rule of 144: Years to quadruple (144÷rate)
Interest RateYears to DoubleExample: $10,000 becomes
4%18 years$20,000 in 18 years
6%12 years$20,000 in 12 years
8%9 years$20,000 in 9 years
10%7.2 years$20,000 in 7.2 years
12%6 years$20,000 in 6 years

The Rule of 72 is a simplified formula that gives approximate results. For exact calculations, use our compound interest calculator. The rule is most accurate for rates between 6-10%.

Q

How much difference do regular contributions make?

Regular contributions dramatically accelerate wealth building. $200/month at 7% for 30 years: $0 initial → $243,994. Starting with $10,000 + $200/month → $320,117. The combination of initial principal and consistent contributions maximizes compound growth.

  • Consistency beats timing: Regular investing smooths volatility
  • Dollar-cost averaging: Buy more shares when prices are low
  • Automate contributions: Set and forget for best results
  • Even $50/month compounds to significant sums over decades
Strategy (7% return, 30 years)Total ContributedFinal BalanceInterest Earned
$10,000 one-time$10,000$76,123$66,123
$200/month only$72,000$243,994$171,994
$10,000 + $200/month$82,000$320,117$238,117
$10,000 + $500/month$190,000$685,985$495,985

Warren Buffett attributes his wealth to three things: living in America, good genes, and compound interest. Starting early with consistent contributions - even small ones - can build significant wealth. A 25-year-old investing $200/month until 65 accumulates more than a 35-year-old investing $400/month.

Q

What is a good compound interest rate for investments?

Historical stock market returns average 7-10% annually after inflation. S&P 500 has returned ~10% since 1926. High-yield savings: 4-5% (2024). Bonds: 3-5%. Real estate: 8-12%. Higher returns come with higher risk - balance based on your timeline and risk tolerance.

  • Use 7% for conservative long-term projections
  • Past performance doesn't guarantee future returns
  • Inflation averages 2-3%, reducing real returns
  • Diversification reduces risk while maintaining returns
Investment TypeTypical Annual ReturnRisk LevelBest For
High-Yield Savings4-5%Very LowEmergency fund
Bonds/Bond Funds3-5%LowConservative investors
S&P 500 Index7-10%MediumLong-term growth
Growth Stocks10-15%HighAggressive growth

Example Calculations

1Long-Term Savings Growth

Inputs

Initial Investment$10,000
Monthly Contribution$200
Interest Rate7%
Time Period30 years

Result

Final Balance$320,117
Total Contributed$82,000
Interest Earned$238,117

Consistent monthly investing combined with compound interest turns $82,000 in contributions into over $320,000.

2Rule of 72 - Doubling Money

Inputs

Initial Investment$25,000
Interest Rate8%
Time Period9 years

Result

Final Balance$50,000
Interest Earned$25,000
Doubling Time~9 years (72÷8)

At 8% annual return, your money doubles approximately every 9 years using the Rule of 72.

3Starting Early vs Starting Late

Inputs

Monthly Contribution$300
Interest Rate7%
Start Age25 (vs 35)
End Age65

Result

Balance at 65 (start at 25)$566,764
Balance at 65 (start at 35)$243,994
Difference+$322,770

Starting 10 years earlier results in $322,770 more, despite contributing only $36,000 extra.

Formulas Used

Compound Interest Formula

A = P(1 + r/n)^(nt)

Calculates the future value of an investment with compound interest.

Where:

A= Final amount (principal + interest)
P= Principal (initial investment)
r= Annual interest rate (as decimal)
n= Compounding frequency per year
t= Time in years

Future Value with Regular Deposits

FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]

Calculates future value with an initial principal and regular monthly contributions.

Where:

FV= Future value
PMT= Regular payment amount

Rule of 72

Years to Double = 72 ÷ Interest Rate

Quick estimation of how long it takes to double your money.

The Power of Compound Interest

Albert Einstein allegedly called compound interest the "eighth wonder of the world." Whether he said it or not, the power of compounding is undeniable - it allows your money to grow exponentially rather than linearly over time, with each year's gains earning their own gains.

The compound interest formula (A = P(1 + r/n)^(nt)) accounts for principal (P), annual rate (r), compounding frequency (n), and time (t). The magic happens with time: the longer your investment horizon, the more dramatic the compounding effect becomes.

Starting early is the key to maximizing compound interest. Investing $200/month from age 25 yields more than $400/month starting at age 35 - you contribute less but end up with more. Time in the market consistently beats timing the market when it comes to compound growth.

Related Guides & Resources

  • Understanding Compound Interest

    Deep dive into how compound interest works

  • Investment Basics Guide

    How to start investing wisely

  • Setting and Reaching Savings Goals

    Why time in the market beats timing the market

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Last Updated: Feb 12, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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