Compound Interest Calculator
Results
Growth Over Time
Learn more about compound interest
What Is Compound Interest?
Compound interest is the process of earning interest on both your original investment and the interest that has already accumulated. Unlike simple interest, which only calculates returns on the principal, compound interest accelerates wealth building by reinvesting earnings over time.
Albert Einstein supposedly called compound interest the eighth wonder of the world. Whether or not the quote is real, the math is undeniable. A modest monthly contribution invested consistently over decades can grow into a substantial nest egg. The key variables are your starting amount, how much you add regularly, the rate of return, and most importantly, time.
The earlier you start investing, the more time compound interest has to work in your favor. Even small amounts invested in your twenties can outperform much larger contributions started in your forties. This is why financial advisors consistently emphasize starting early. The calculator above lets you experiment with different scenarios to see how changing each variable affects your long-term wealth.
A common benchmark is the S&P 500 historical average return of roughly 10% per year before inflation, or about 7% after inflation. Of course, past performance does not guarantee future results, and actual returns vary year to year. But using historical averages gives you a reasonable baseline for planning purposes.
What Is Compound Interest?
Compound interest is the process of earning interest on both your original investment and the interest that has already accumulated. Unlike simple interest, which only calculates returns on the principal, compound interest accelerates wealth building by reinvesting earnings over time.
Albert Einstein supposedly called compound interest the eighth wonder of the world. Whether or not the quote is real, the math is undeniable. A modest monthly contribution invested consistently over decades can grow into a substantial nest egg. The key variables are your starting amount, how much you add regularly, the rate of return, and most importantly, time.
The earlier you start investing, the more time compound interest has to work in your favor. Even small amounts invested in your twenties can outperform much larger contributions started in your forties. This is why financial advisors consistently emphasize starting early. The calculator above lets you experiment with different scenarios to see how changing each variable affects your long-term wealth.
A common benchmark is the S&P 500 historical average return of roughly 10% per year before inflation, or about 7% after inflation. Of course, past performance does not guarantee future results, and actual returns vary year to year. But using historical averages gives you a reasonable baseline for planning purposes.
Investments are risky, but treating what a random guy on the internet says as financial advice is riskier. Do your own research. This is for educational purposes only.