Compound interest calculator
Discover how much your money grows with the magic of compound interest. Initial principal + monthly contributions + monthly compounding.
Your data
Future value of your investment
USD 63 829
After investing for 20 years
Total you contributed
USD 25 000
Your actual money, before returns
Interest earned
USD 38 829
155% more than contributed
Frequently asked questions
What is compound interest?
It is interest calculated on the initial principal plus the interest accumulated in previous periods. It is the 'eighth wonder of the world' according to Einstein: your returns generate more returns in every period, accelerating growth exponentially.
What is the compound interest formula?
FV = P × (1 + r/n)^(n×t), where FV = future value, P = initial principal, r = annual rate as a decimal, n = times compounded per year (12 = monthly), t = years. If you make periodic contributions, the future value of the annuity is added.
How much does compound interest yield monthly vs annually?
Compounding monthly yields more than annually at the same nominal rate. A 12% nominal rate compounded monthly is equivalent to an effective annual rate (EAR) of approximately 12.68%.
Which investments does compound interest apply to?
It applies to high-yield savings accounts, certificates of deposit (CDs), mutual funds, ETFs, stocks (via reinvested dividends), coupon bonds, 401(k)/IRA retirement plans, and any instrument where you reinvest the returns.
When does compound interest work against me?
With debt: credit cards, personal loans, and BNPL apply compound interest to your debt. If you only pay the minimum, the debt grows exponentially. That's why paying off high-APR debt is often the best guaranteed 'investment return'.
How do I use this calculator?
Enter your initial capital (what you already have invested), the expected annual interest rate (the US S&P 500 has averaged 10% historically, bonds 4-5%), the years you will keep the investment, and the monthly contribution you will make. We calculate with monthly compounding.
Real examples:
- $1,000 initial + $100/month × 20 years at 8% = $63,000+ (you actually set aside $25,000)
- $5,000 initial + $300/month × 30 years at 7% = $405,000+ (you actually set aside $113,000)
- $0 initial + $500/month × 40 years at 8% = $1,750,000+ (you actually set aside $240,000)
The difference between what you contribute and what you have at the end is pure compound interest. Starting early beats any "invest more later" strategy.
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