Enter your principal, interest rate, time period, and optional monthly contributions to see exactly how your money grows — with a full year-by-year breakdown.
The amount of money you are starting with today.
The yearly interest rate. For savings accounts this is often 2–6%. Stock market average is ~7–10%.
How long you plan to keep the money invested.
How often interest is added to your balance. More frequent = slightly higher returns.
Additional amount you add each month. Leave 0 if no regular contributions.
Adjust for inflation to see the real purchasing power of your final amount. Leave 0 to skip.
Final Balance
--
--
💵 Principal (money you put in)--
➕ Total contributions added--
📈 Total interest earned--
📊 Interest as % of final balance--
🔁 Effective annual yield (APY)--
⏳ Rule of 72 – Doubles in--
💸 Inflation-adjusted value--
Total Put In
--
principal + contributions
Interest Earned
--
from compounding
Final Balance
--
total value
Return on Investment
--
total ROI %
📊 Year-by-Year Growth
Principal + Contributions Interest
📋 Year-by-Year Breakdown
Year
Start Balance
Contributions
Interest Earned
End Balance
Total Invested
* Interest is compounded at the selected frequency. Values are rounded to 2 decimal places.
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How Compound Interest Works
Compound interest is often called the eighth wonder of the world — a phrase attributed to Albert Einstein. Unlike simple interest, which is only ever calculated on your original principal, compound interest is calculated on your principal plus all accumulated interest. This means your interest earns interest, creating exponential growth over time.
The Formula
The compound interest formula is: A = P(1 + r/n)nt, where A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of compounding periods per year, and t is the number of years. Interest earned = A − P.
Why Compounding Frequency Matters
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which yields more than annual. The difference is small over short periods but becomes significant over decades. Most savings accounts and money market funds compound daily or monthly.
The Power of Regular Contributions
Adding even a small amount every month dramatically boosts your final balance. Each contribution starts earning compound interest from the moment it is added. Over a 30-year period, regular monthly contributions often contribute more to final wealth than the initial lump sum.
The Rule of 72
A quick mental math trick: divide 72 by your annual interest rate to estimate the years needed to double your money. At 6% it takes approximately 12 years; at 9% only 8 years. This rule works because of the mathematics of exponential growth.
Compound Interest vs Simple Interest
With simple interest, a $10,000 investment at 8% for 20 years earns $16,000 in interest — a final balance of $26,000. With compound interest (monthly compounding), the same investment grows to approximately $49,268 — almost double. This gap widens every year, illustrating why time in the market is so critical to long-term wealth building.
Frequently Asked Questions
Compound interest is interest earned on both your original principal and previously earned interest. Over time this creates exponential growth — very different from simple interest which is only ever calculated on the principal.
The formula is A = P(1 + r/n)nt. A = final amount, P = principal, r = annual rate (decimal), n = compounding periods per year, t = years. Interest earned = A − P.
The more frequently interest compounds, the more you earn. Daily compounding yields the most, followed by monthly, quarterly, and annually. The difference is small short-term but compounds into significant amounts over decades.
Divide 72 by your interest rate to estimate years to double your money. At 8% annual interest: 72 ÷ 8 = 9 years to double. It is a reliable mental math shortcut for any compounding investment.
Yes — enormously. Each monthly contribution starts compounding immediately. Over 20–30 years, regular contributions often exceed the original principal in terms of impact on final wealth.
APY is the effective annual rate that accounts for compounding frequency. If interest compounds monthly at 8% nominal rate, the APY is slightly higher (~8.3%). This calculator shows your APY so you can compare it accurately with other investments.