Compound Interest Calculator
Calculate how your investments grow over time with compound interest. See the power of compounding with monthly contributions.
Final Balance
$343,778
Total Contributions
$130,000
Interest Earned
$213,778
Your money grew 164.4% beyond your contributions
How It Works
- 1Enter your initial investment amount (the money you start with).
- 2Add your planned monthly contribution (how much you'll invest each month).
- 3Set the expected annual interest rate (historical stock market average is ~8-10%).
- 4Choose your investment timeline in years.
- 5See your projected final balance, total contributions, and interest earned.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates a snowball effect where your money grows faster over time as you earn interest on your interest.
What's a realistic annual return rate to use?
The S&P 500 has historically returned about 10% annually before inflation, or about 7% after inflation. For conservative estimates, use 6-7%. For optimistic projections, use 8-10%. Remember past performance doesn't guarantee future results.
How often is interest compounded in this calculator?
This calculator compounds interest monthly (12 times per year), which is how most investment accounts work. More frequent compounding results in slightly higher returns.
Why is starting early so important for investing?
Due to compound interest, money invested earlier has more time to grow. Someone who invests $200/month from age 25-35 (10 years) can end up with more than someone who invests $200/month from age 35-65 (30 years), assuming the same return rate.