For illustrative purposes only. Actual investment returns may vary.
Our compound interest calculator helps you understand how your investments grow over time. Whether you're planning for retirement, saving for a big purchase, or just curious about investment growth, this tool provides accurate calculations for any scenario.
Compound interest is the interest earned on both your initial investment and the accumulated interest from previous periods. This powerful effect can significantly boost your returns over time, especially with regular contributions.
In this example:
The graph shows how regular contributions and compound interest work together to grow your investment over time.
To maximize your investment growth, consider these strategies:
Even small regular contributions can make a big difference over time. For example, adding $200 monthly to a $10,000 investment at 7% for 10 years can nearly double your final balance compared to just the initial investment.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It's often called "interest on interest" and can significantly boost your investment returns over time.
The more frequently interest is compounded, the higher your returns will be. For example, monthly compounding will yield slightly more than annual compounding at the same rate. Our calculator lets you compare different compounding frequencies.
Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest. Over time, compound interest can generate significantly higher returns.
Regular contributions can dramatically increase your final balance. Even small, consistent contributions can make a big difference over time due to the power of compound interest.
The Rule of 72 is a quick way to estimate how long it takes for an investment to double. Divide 72 by your annual interest rate to get the approximate number of years. For example, at 7% interest, your money would double in about 10.3 years.
Inflation reduces the purchasing power of your money over time. When planning investments, consider the real rate of return (nominal return minus inflation) to understand your true growth.
To maximize compound interest: 1) Start investing early, 2) Make regular contributions, 3) Choose investments with higher returns, 4) Reinvest dividends and interest, and 5) Minimize fees and taxes.
Taxes can significantly impact your compound interest growth. Tax-advantaged accounts like IRAs and 401(k)s can help maximize compound interest by deferring or eliminating taxes on investment gains.
APR (Annual Percentage Rate) doesn't account for compounding, while APY (Annual Percentage Yield) does. APY gives you the true annual return on your investment, making it better for comparing different investment options.
Our calculator is perfect for retirement planning. Input your current savings, expected annual contributions, estimated return rate, and years until retirement to see how your nest egg might grow. Adjust variables to find the right balance for your goals.