Compound Interest Calculator

Calculate the future value of your investment with compound interest and optional monthly contributions. See the power of compounding.

Starting amount you invest

Amount you add each month (optional)

Expected annual return (stocks avg ~10%, bonds ~5%)

How long you plan to invest

How often interest compounds

A = P(1 + r/n)^(nt) + PMT x [((1 + r/n)^(nt) - 1) / (r/n)], where P=principal, r=rate, n=compounds/year, t=years, PMT=monthly contribution
$10,000 initial + $200/month at 7% for 20 years compounded monthly: Future value = $122,709, Total contributions = $58,000, Interest earned = $64,709

What is compound interest and how does it work?

Compound interest is "interest on interest." Your earnings are reinvested and generate their own earnings. For example, $10,000 at 7% annually becomes $10,700 after year 1, then $11,449 after year 2 (7% of $10,700, not $10,000). This compounding effect accelerates growth exponentially over time.

How often should interest compound for best results?

More frequent compounding is better. Daily compounding yields slightly more than monthly, which yields more than annually. However, the difference is small. For example, $10,000 at 5% for 10 years: Annual = $16,289, Monthly = $16,470, Daily = $16,487. Focus more on interest rate and contribution amount.

What is the Rule of 72?

Divide 72 by your annual interest rate to estimate years to double your money. At 7% annual return, money doubles in about 10 years (72 / 7 = 10.3). At 10%, it doubles in 7.2 years. This quick mental math helps you understand growth potential.

How much should I invest monthly to reach $1 million?

It depends on time and returns. At 7% annual return: $500/month for 40 years = $1.2M, $1,000/month for 30 years = $1.2M, $2,000/month for 20 years = $1.0M. Starting early makes a huge difference due to compounding.