Compound Interest Calculator
Watch the eighth wonder of the world turn small contributions into significant wealth.
| Year | Total Contributed | Interest Earned | Balance |
|---|---|---|---|
| 1 | $16,000 | $919 | $16,919 |
| 2 | $22,000 | $2,339 | $24,339 |
| 3 | $28,000 | $4,294 | $32,294 |
| 4 | $34,000 | $6,825 | $40,825 |
| 5 | $40,000 | $9,973 | $49,973 |
| 6 | $46,000 | $13,782 | $59,782 |
| 7 | $52,000 | $18,299 | $70,299 |
| 8 | $58,000 | $23,578 | $81,578 |
| 9 | $64,000 | $29,671 | $93,671 |
| 10 | $70,000 | $36,639 | $106,639 |
| 11 | $76,000 | $44,544 | $120,544 |
| 12 | $82,000 | $53,455 | $135,455 |
| 13 | $88,000 | $63,443 | $151,443 |
| 14 | $94,000 | $74,587 | $168,587 |
| 15 | $100,000 | $86,971 | $186,971 |
| 16 | $106,000 | $100,683 | $206,683 |
| 17 | $112,000 | $115,820 | $227,820 |
| 18 | $118,000 | $132,486 | $250,486 |
| 19 | $124,000 | $150,790 | $274,790 |
| 20 | $130,000 | $170,851 | $300,851 |
| 21 | $136,000 | $192,796 | $328,796 |
| 22 | $142,000 | $216,760 | $358,760 |
| 23 | $148,000 | $242,892 | $390,892 |
| 24 | $154,000 | $271,345 | $425,345 |
| 25 | $160,000 | $302,290 | $462,290 |
| 26 | $166,000 | $335,905 | $501,905 |
| 27 | $172,000 | $372,384 | $544,384 |
| 28 | $178,000 | $411,934 | $589,934 |
| 29 | $184,000 | $454,777 | $638,777 |
| 30 | $190,000 | $501,150 | $691,150 |
Compound Interest — Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal plus all previously accumulated interest. Over long periods, the difference is enormous: $10,000 at 7% simple interest for 30 years grows to $31,000. The same amount at 7% compound interest grows to $76,123 — more than twice as much.
How often should interest compound for maximum growth?
More frequent compounding produces slightly higher returns. Daily compounding is marginally better than monthly, which is better than annually. However, the difference between daily and monthly compounding is very small (less than 0.1% annually). The compounding frequency matters far less than your contribution amount and time horizon.
What is the Rule of 72?
The Rule of 72 is a mental math shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, your money doubles in 12 years (72 ÷ 6). At 9%, in 8 years. At 4%, in 18 years. It's a quick way to compare different investment rates without a calculator.
What average return should I use for stock market investments?
The US stock market (S&P 500) has historically returned approximately 10% annually in nominal terms, or about 7% after inflation. For conservative planning, most financial advisors recommend using 6–7% real return assumptions. Bonds historically return 2–4% real. A balanced 60/40 portfolio of stocks and bonds might assume 5–6% real returns.
Is the monthly contribution or starting balance more important?
For young investors with long time horizons, the monthly contribution matters more than the starting balance. This is because consistent contributions over decades create a far larger final balance than a one-time lump sum at the same total cost. Starting early — even with small amounts — maximizes the time available for compounding to work.
What is a realistic compound interest return for a savings account?
High-yield savings accounts (HYSAs) at online banks currently offer 4.5–5.5% APY (annual percentage yield), which represents monthly compounding already. Traditional bank savings accounts offer 0.3–0.5% APY — far lower. For the compound interest calculator, use 4.5–5% for HYSA scenarios and 6–8% for long-term stock market investment scenarios.