Compound Interest Calculator
See how your investments grow over time with the power of compound interest.
Compound Interest Calculator
See how your investments grow over time
S&P 500 historical average: ~10%
Future Value
$107,144
After 10 years at 7.0% annual return
$70,000
principal + deposits
+$37,144
compound growth
7.23%
annual yield
$6,000
per year
Growth Timeline
How to Use This Calculator
Enter your initial investment - the lump sum you're starting with. This could be savings, an inheritance, or any amount you want to invest.
Specify monthly contributions to see how regular investing accelerates your growth. Even small amounts add up significantly over time.
Set the interest rate based on your expected returns. The S&P 500 has historically returned about 10% annually, but past performance doesn't guarantee future results.
Choose your compound frequency - how often interest is calculated and added to your principal. Monthly is typical for most investments.
Understanding Your Results
Future value shows what your investment will be worth at the end of your investment period. This includes all contributions and earned interest.
Total interest is the money you earned from compounding alone. This is essentially "free money" generated by your investment.
The growth chart shows how contributions (your money) and interest (earned money) grow over time. Notice how interest becomes a larger portion in later years - that's compound interest at work.
The Power of Starting Early
Time is your greatest asset. Starting at age 25 instead of 35 with the same monthly contribution can result in nearly double the final amount, even though you only contributed for an extra 10 years.
Example: $300/month at 7% starting at age 25 grows to $566,000 by age 65. Starting the same $300/month at age 35 only reaches $283,000 - half as much with just 10 fewer years.
The early years matter most because compound interest accelerates over time. Money invested today has decades to grow, while money invested later has less time to compound.
Realistic Return Expectations
Historical averages: The S&P 500 has returned about 10% annually before inflation, or 7% after inflation adjustment. These are long-term averages with significant year-to-year variation.
Bonds are more conservative: Government bonds typically return 4-5%, while high-yield savings accounts offer 4-5% in high-rate environments. Lower risk means lower returns.
Account for inflation: A 7% return with 3% inflation means your real purchasing power grows at only 4%. Use our inflation calculator to understand the true value of your savings.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It's essentially 'interest on interest' and causes wealth to grow exponentially over time.
What is the compound interest formula?
The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is principal, r is annual interest rate, n is compounds per year, and t is time in years. With regular contributions, the formula becomes more complex.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your interest rate percentage. At 8% annual return, money doubles in approximately 9 years (72/8=9).
How often should interest compound?
More frequent compounding produces higher returns. Daily compounding beats monthly, which beats annually. However, the difference is usually small for typical savings rates. Focus on getting the best rate rather than compound frequency.
How much will $10,000 grow in 10 years?
At 7% annual return compounded monthly, $10,000 grows to about $20,097 in 10 years - more than doubling. At 10%, it reaches $27,070. Add $200/month contributions and that same $10,000 at 7% becomes $54,440 after 10 years.
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest. Example: $1,000 at 10% simple interest earns $100/year forever. With compound interest, year 2 earns $110, year 3 earns $121, and so on.
How do I calculate compound interest in Excel?
Use the FV (Future Value) function: =FV(rate/periods, periods*years, -payment, -principal). For example, =FV(0.07/12, 12*10, -200, -10000) calculates $10,000 initial + $200/month at 7% for 10 years. The result is $54,440.
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