Calculate investment growth over time with compound interest and regular contributions
Input your starting deposit and monthly contribution amount.
Choose interest rate, time period, and compounding frequency.
See your final amount, interest earned, and yearly breakdown.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. In other words, you earn “interest on interest,” which can significantly increase your returns over time. This is the opposite of simple interest, where you only earn interest on the principal amount.
Albert Einstein allegedly called compound interest the “eighth wonder of the world.” The power of compounding comes from time and consistency. The longer your money compounds and the more frequently it compounds, the more wealth you can accumulate. Even small amounts invested regularly can grow substantially over decades.
The frequency of compounding affects how much interest you earn. Common frequencies include:
More frequent compounding results in higher returns, though the difference between monthly and daily compounding is usually small.
The Rule of 72 is a quick way to estimate how long it will take for your investment to double. Simply divide 72 by your annual interest rate. For example, at a 7% annual return, your money will double in approximately 72 ÷ 7 = 10.3 years.
Time is your greatest ally. Starting 10 years earlier can more than double your returns thanks to compounding.
Consistent monthly contributions add up significantly over time and benefit from dollar-cost averaging.
Always reinvest dividends and interest to maximize the compounding effect on your investments.
High fees can significantly reduce your returns over time. Choose low-cost index funds when possible.
Avoid the temptation to withdraw early. Let compound interest work its magic over the long term.
Use 401(k)s, IRAs, and other tax-advantaged accounts to maximize your returns and minimize taxes.
Initial Deposit: $5,000
Monthly Contribution: $500
Interest Rate: 8% annually
Time Period: 40 years
Total Deposited: $245,000
Final Amount: ~$1,865,000
Interest earned: ~$1,620,000
Initial Deposit: $20,000
Monthly Contribution: $1,000
Interest Rate: 7% annually
Time Period: 25 years
Total Deposited: $320,000
Final Amount: ~$857,000
Interest earned: ~$537,000
Compound Interest Formula: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where:
Power of Compounding: Compound interest means you earn interest on your interest. The more frequently interest compounds, the more you earn. That's why starting early and contributing regularly can dramatically increase your wealth over time.