Compound Interest Calculator
Calculate how your money grows with compound interest. See future value with monthly contributions, different compounding frequencies, and year-by-year growth.
How This Calculator Works
Calculation methodology and assumptions
Compound interest is calculated using the formula FV = P(1+r/n)^(nt) + PMT×[((1+r/n)^(nt)-1)/(r/n)], where P is principal, r is annual rate, n is compounding periods per year, t is time, and PMT is periodic contribution. The calculator defaults to monthly compounding (n=12), which is how most investment accounts compound.
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both the initial principal and previously accumulated interest. Unlike simple interest (earned only on principal), compounding creates exponential growth — often called "interest on interest."
What is the Rule of 72?
The Rule of 72 estimates how long it takes money to double: divide 72 by your annual return rate. At 7% returns, money doubles in approximately 72÷7 = 10.3 years.
What is a good annual return rate assumption?
The S&P 500 has historically returned about 10% annually (7% after inflation). For conservative planning, 6-7% after inflation is a reasonable assumption for a diversified stock portfolio.
How much should I invest monthly?
A common guideline is to invest 15-20% of your gross income for retirement. The exact amount depends on your goals, timeline, and current savings.