See how your money grows over time. Enter your starting amount, interest rate, monthly contributions, and time horizon.
Compound interest is interest earned on both your original principal and on previously accumulated interest. Unlike simple interest (which only applies to the principal), compound interest creates a snowball effect where your money grows faster over time. Albert Einstein reportedly called it the eighth wonder of the world — and while the attribution is debated, the math is not. Given enough time, compound interest turns modest savings into substantial wealth.
Enter your starting amount (principal), the annual interest rate you expect, how much you plan to contribute each month, and your time horizon in years. You can also choose how frequently the interest compounds — monthly is most common for savings accounts, while investments typically compound daily. The calculator shows your final balance, how much came from contributions vs interest, milestone markers, and a year-by-year breakdown table.
A quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 8% returns, your money doubles roughly every 9 years (72 / 8 = 9). At 6%, it takes 12 years. This rule works because of the exponential nature of compound growth — the longer you stay invested, the more powerful the effect becomes.
Regular contributions are often more impactful than a larger starting amount. Investing $500 per month at 8% for 30 years produces roughly $680,000 in contributions but a total balance of over $745,000 — the compound interest adds significant value on top. Starting early with even small amounts gives compound interest more time to work, which is far more effective than investing larger amounts later.
For a diversified stock portfolio, 7-10% is a reasonable historical average (before inflation). For savings accounts, use the rate your bank offers (typically 3-5% in 2025-2026). For bonds, 4-6% is common. If you want inflation-adjusted (real) returns, subtract 2-3% from your nominal rate.
Simple interest is calculated only on your original principal. Compound interest is calculated on the principal plus all previously earned interest. Over long periods, the difference is enormous. A $10,000 investment at 8% simple interest earns $800/year forever. With compound interest, it earns $800 the first year, then $864 the second year (8% of $10,800), and keeps accelerating.
Yes, but less than most people think. Monthly compounding produces slightly more than annual compounding, and daily produces slightly more than monthly. The difference between monthly and daily compounding on a $10,000 investment at 8% over 20 years is only about $50. The interest rate and time horizon matter far more than the compounding frequency.
Financial advisors commonly recommend saving 15-20% of your gross income for retirement. However, any amount is better than nothing — even $100/month invested at 8% for 30 years grows to over $149,000. The most important thing is to start, then increase contributions as your income grows.
This calculator assumes a fixed annual return, which is useful for planning but does not reflect reality. Real stock market returns vary significantly from year to year — some years are up 30%, others are down 20%. For a more realistic projection using actual historical returns and volatility, try our Portfolio Builder which includes Monte Carlo simulation.