What is compound interest and how does it work?

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. It's often called 'interest on interest' and causes wealth to grow exponentially over time.

How important is starting early with investments?

Extremely important! Starting just 10 years earlier can more than double your final investment value due to compounding. Time in the market is often more important than timing the market.

What's the Rule of 72?

The Rule of 72 is a simple way to estimate how long it takes for an investment to double. Divide 72 by your annual return rate. For example, at 7% return, your money doubles approximately every 10.3 years (72 ÷ 7 = 10.3).

Compound Interest Calculator

Discover the power of compound interest for your investments. Calculate future growth, plan for retirement, compare different scenarios, and see how small regular investments can grow into substantial wealth over time.

Initial Investment ($)

Monthly Contribution ($)

Annual Interest Rate (%)

Investment Period (years)

Compounding Frequency

Advanced OptionsOptional

Adjust for Inflation (2.5%)

Account for Taxes (25%)

Popular Investment Scenarios

Harness the Power of Compound Interest

Exponential Growth

Your money grows faster over time as you earn interest on your interest

Time is Your Ally

The longer your investment period, the more powerful compounding becomes

Regular Contributions

Small, consistent investments can grow into substantial wealth over time

Goal Planning

Plan exactly how much to invest to reach your financial goals

Compound Interest Formulas & Real-World Examples

Essential Formulas

Compound Interest Formula:
A = P(1 + r/n)^(nt)

Where:
A = Future Value
P = Principal Amount
r = Annual Interest Rate
n = Compounding Frequency
t = Time in Years

With Regular Contributions:
FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]

Power of Compounding Examples

$10,000 @ 7% for 30 years:
Grows to $76,123 without additional contributions

$500/month @ 7% for 30 years:
Grows to $567,000 with regular contributions

Starting 10 years earlier:
Can double your final investment value

1% higher return:
Can increase final value by 25-30% over 30 years

Wealth Building Strategies:

Start Early: A 25-year-old investing $300/month at 7% will have $1.2 million at 65. Consistency Matters: Regular contributions harness dollar-cost averaging and compound growth. Reinvest Dividends: Automatically reinvesting earnings accelerates compounding. Increase Contributions: Boosting contributions by 1-2% annually can dramatically increase final wealth.

Success Stories: Real People Building Wealth

See how compound interest is helping people achieve their financial dreams

'This compound interest calculator showed me how small monthly investments can grow into significant wealth over time. I'm now on track to retire early!'

- Michael T., Investor

Compound Interest FAQs

Answers to common questions about compound interest and investing