Compound Interest Calculator
See how an investment or savings account grows with compound interest. Includes optional monthly contributions.
Year-by-Year Breakdown
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The Magic of Compound Interest
Albert Einstein allegedly called compound interest "the eighth wonder of the world." Three factors drive growth:
- Time — by far the most important. Starting at 25 vs 35 with the same savings often doubles your retirement nest egg.
- Rate of return — small differences compound into huge gaps. 6% vs 8% over 30 years differs by ~75%.
- Regular contributions — automatic monthly deposits dwarf one-time lump sums for most people.
The Rule of 72
Quick mental math for doubling time: 72 ÷ annual return = years to double. At 6% → 12 years. At 8% → 9 years. At 10% → 7.2 years. Useful for "is this investment worth it" decisions.
FAQ
What is the compound interest formula?
A = P × (1 + r/n)^(n×t). A = final amount, P = principal, r = annual rate (decimal), n = compounds per year, t = years. With regular contributions, add the future value of an annuity term.
How does compounding frequency affect returns?
More frequent compounding (e.g., daily vs annual) marginally increases the final amount. At 5% over 10 years, $10,000 grows to $16,289 (annual) vs $16,470 (daily) — a 1.1% difference. Time and rate matter much more than frequency.
What is the rule of 72?
A shortcut: 72 ÷ annual rate ≈ years to double. At 6%: 72/6 = 12 years. At 8%: 72/8 = 9 years. Accurate for rates between 4% and 12%.