Compound Interest Calculator
See how your money grows over time with the power of compound interest
The starting amount you're investing
Amount you'll add each month
Expected annual return rate (S&P 500 avg: ~10%)
How long you plan to invest
See Your Money Grow
Enter your investment details to see how compound interest grows your wealth over time.
How to Use the Compound Interest Calculator
Enter Initial Investment
Enter the amount you're starting with. This is your principal, the money you have to invest right now.
Set Monthly Contributions
Enter how much you plan to add each month. Even $50-$200 per month can grow significantly over time.
Choose Rate & Duration
Set your expected annual interest rate and investment period. The S&P 500 has averaged about 10% annually over the long term.
Review Growth Projections
See your future value, total interest earned, and a year-by-year breakdown showing exactly how your money grows.
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is interest calculated on both the initial principal and all previously accumulated interest. For example, if you invest $10,000 at 7% annual interest compounded monthly, after one year you'll have approximately $10,722.90 - not just $10,700 as with simple interest. The extra $22.90 comes from earning interest on your interest. Over long periods, this compounding effect becomes dramatic. The same $10,000 at 7% grows to about $19,672 in 10 years and $76,123 in 30 years without any additional contributions.
How much should I invest monthly to become a millionaire?
The amount depends on your timeline and expected return rate. Assuming a 10% average annual return (historical S&P 500 average), here's roughly how much you'd need to invest monthly: Starting at age 25 (40 years): about $158/month. Starting at age 30 (35 years): about $263/month. Starting at age 35 (30 years): about $442/month. Starting at age 40 (25 years): about $754/month. This demonstrates why starting early is so powerful - waiting 10 years nearly triples the required monthly investment. Use our calculator to model your specific scenario.
What interest rate should I use for my calculations?
The interest rate depends on your investment type. For stock market index funds, the historical average return of the S&P 500 is about 10% annually before inflation (7% after inflation). High-yield savings accounts currently offer 4-5%. CDs typically offer 3-5%. Bond funds average 4-6%. Real estate investments average 8-12%. For conservative planning, use 6-7% for stock investments. For optimistic projections, use 8-10%. Remember that past performance doesn't guarantee future results, and actual returns will vary year to year.
Does compounding frequency really matter?
Yes, but the difference is relatively small. More frequent compounding produces slightly higher returns because interest is calculated and added to your balance more often. For example, $10,000 at 10% for 10 years: Annually = $25,937. Monthly = $27,070. Daily = $27,179. The difference between annual and monthly compounding is about $1,133 (4.4% more), while the difference between monthly and daily is only $109. For most practical purposes, monthly compounding is a good approximation. Most savings accounts compound daily, while many investments compound quarterly or monthly.
What's the Rule of 72 and how does it relate to compound interest?
The Rule of 72 is a simple mental math shortcut to estimate how long it takes for an investment to double. Simply divide 72 by your annual interest rate. At 6% interest, your money doubles in approximately 12 years (72 / 6 = 12). At 8%, it doubles in about 9 years. At 10%, about 7.2 years. At 12%, about 6 years. This rule helps you quickly understand the power of compound interest without a calculator. It works best for rates between 4-12% and becomes less accurate at extreme rates.