Compound Interest Calculator
Calculate how your investments grow with compound interest and regular contributions. See the power of time and consistent investing.
Compound Interest Calculator
Enter your investment details to see how compound interest grows your money over time
The amount you start with (optional)
Amount you add each month (optional)
Expected annual return
How long to invest
How often interest compounds
Calculation Formula (Monthly Compounding)
Key Features
Understanding Compound Interest
Investment Tips
Frequently Asked Questions
What is compound interest?
Compound interest is when you earn interest on both your original investment and previously earned interest. This creates exponential growth over time, making it "the eighth wonder of the world" according to Einstein.
How much difference does compounding frequency make?
The impact varies by amount and time. For $10,000 at 7% over 20 years: Annual = $38,697, Monthly = $40,600, Daily = $40,953. The difference is about $2,300 - significant but not dramatic for most scenarios.
What's a realistic return rate to use?
Historically, the S&P 500 has averaged about 10% annually, but 7-8% is more conservative for planning. High-yield savings accounts: 4-5%. Bonds: 3-5%. Always use conservative estimates for long-term goals.
When should I start investing?
The best time is now! Starting at 25 vs 35 can mean 2-3x more money at retirement due to compound interest. Even starting with $25/month is better than waiting for the "perfect" amount.
How much should I contribute monthly?
Start with 10-15% of your income if possible. Can't afford that much? Start with anything - even $50/month becomes $175,000+ over 30 years at 7% return. Increase by 1% annually when you get raises.
Should I pay off debt first or invest?
Generally, pay off high-interest debt (>8-10%) first. For low-interest debt (like mortgages), you can invest simultaneously. Always get any employer 401(k) match first - that's free money!
What about inflation's impact?
Inflation (typically 2-3% annually) reduces purchasing power over time. This calculator shows nominal returns. For real purchasing power, subtract inflation from your return rate (e.g., 7% return - 3% inflation = 4% real growth).
How do the compounding formulas work?
The key difference is the frequency (n): Annual (n=1), Monthly (n=12), Daily (n=365). As n increases, (1 + r/n)^(n×t) approaches e^(r×t), which is continuous compounding. For 7% over 20 years: e^(0.07×20) = 4.055x vs annual 3.87x growth.
Are these calculations guaranteed?
No, these are projections based on assumed rates of return. Real investments fluctuate and may lose value. This calculator helps with planning, but actual results will vary based on market performance and economic conditions.
Important Investment Disclaimer
This compound interest calculator is for educational purposes only and should not replace professional financial advice.Investment returns are not guaranteed and may fluctuate significantly. Past performance does not guarantee future results. This calculator uses hypothetical scenarios and actual investment outcomes may vary considerably due to market volatility, fees, taxes, and other factors. Always consult qualified financial advisors before making investment decisions.
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