Compound Interest Calculator
Compounding is when your returns start earning their own returns. Type in your numbers and watch the snowball build — the chart updates live.
Your inputs
Growth over time
Where the money came from
Year-by-year breakdown
| Year | Contributions | Interest earned | End balance |
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What is compound interest?
Compound interest is interest earned on interest. In year one, your money grows by the return rate. In year two, you earn returns not just on your original deposit, but on last year's gains too. Each cycle, the base getting multiplied gets a little bigger — which is why growth starts slow and then bends upward like a hockey stick.
A famous illustration: at a 7% annual return, money roughly doubles every 10 years (the "Rule of 72": divide 72 by your rate to estimate doubling time). $10,000 becomes ~$20,000 in a decade, ~$40,000 in two, ~$80,000 in three — with you adding nothing after the first deposit.
The math behind this calculator
This tool compounds monthly, the way most savings and investment accounts actually credit returns:
where P = initial amount, PMT = monthly contribution, r = annual rate, n = total months.
The first term grows your starting lump sum; the second grows the stream of monthly contributions. Contributions are assumed to land at the end of each month.
Worked example
Start with $10,000, add $500/month, earn 7% a year for 30 years. Monthly rate ≈ 0.583%, over 360 months. The $10,000 grows to about $81,000 on its own, and the $500/month stream ($180,000 contributed) grows to about $610,000. Total: roughly $691,000 — of which only $190,000 was your money. The other $501,000 is compounding doing the heavy lifting.
Caveats worth knowing
- Returns aren't smooth. Markets swing wildly year to year; 7% is a long-run average, not a promise. The U.S. stock market's long-term average is often cited near 10% before inflation (~7% after), but any single decade can look very different.
- Inflation eats purchasing power. This calculator shows nominal dollars. At 3% inflation, $647,000 in 30 years buys what about $266,000 buys today.
- Fees and taxes are ignored. A 1% annual fee can quietly consume nearly a third of your gains over decades.
- Time beats timing. Starting 10 years earlier usually matters more than finding an extra 1–2% of return — the exponent is years, not rate.
Sources: U.S. Securities and Exchange Commission, compound interest calculator and explainer (investor.gov).