📈

Compound Interest Calculator

With monthly contributions and year-by-year growth chart

Investment Details

$
$
%

S&P 500 historical average: ~10% nominal, ~7% inflation-adjusted

years

Final Balance

$124,379

Total Contributions

$53,000

Interest Earned

$71,379

Balance Growth Over Time

Yr 1
$7,840
Yr 3
$14,151
Yr 5
$21,407
Yr 7
$29,750
Yr 9
$39,343
Yr 11
$50,373
Yr 13
$63,055
Yr 15
$77,637
Yr 17
$94,404
Yr 19
$113,682
Yr 20
$124,379
ContributionsInterest earned
Advertisement

The Mechanics of Compound Interest

Albert Einstein reportedly called compound interest the eighth wonder of the world. Whether or not he said it, the math is genuinely remarkable. What makes compound interest so powerful is not the rate - it is time.

Consider two people. Person A starts investing $300/month at age 22 and stops at 32 - just 10 years of contributions. Person B starts at 32 and contributes $300/month until 62 - 30 years of contributions. At 7% growth, Person A ends up with more money at 62. Starting early beats contributing more.

The Rule of 72

A quick mental math trick: divide 72 by your interest rate to find roughly how many years it takes to double your money. At 7%, money doubles every 10.3 years. At 10%, every 7.2 years. At 4% (HYSA), every 18 years.

Monthly Contributions Are the Real Accelerator

Lump-sum investing is great, but most people build wealth by contributing regularly over time. This calculator models exactly that. When you add $200/month consistently, you are essentially buying in at many different market prices, and each new contribution starts compounding immediately. Over 20-30 years, the monthly contributions often exceed the starting principal in total value.

Frequently Asked Questions

What is compound interest?

Compound interest means you earn interest on your interest. Unlike simple interest (which only applies to your principal), compound interest builds on itself. A $10,000 investment at 7% earns $700 in year one, then 7% of $10,700 in year two, and so on. The longer the time period, the more dramatic the effect.

How often does compound interest compound?

It depends on the account or investment. Most savings accounts compound daily or monthly. Index funds and ETFs effectively compound continuously as dividends are reinvested. For practical planning purposes, monthly compounding is a reasonable assumption for most savings vehicles.

What interest rate should I use?

For the S&P 500, the historical average is around 10% nominal or 7% inflation-adjusted. For a high-yield savings account, use current rates (4-5% as of 2026). For bonds, 3-4% is reasonable. Be conservative in your projections - it is better to be pleasantly surprised than to count on aggressive returns.

Why does monthly contribution matter so much?

Monthly contributions dramatically accelerate growth, especially over long time periods. This is because you are not just adding money - you are adding money that then also compounds. Try doubling the monthly contribution in the calculator and watch the final balance change. The impact is non-linear.

Does this account for inflation?

No. Use an inflation-adjusted rate (typically 2-3% below the nominal rate) if you want to see your results in today's purchasing power. For a historically average S&P 500 return of 10%, use 7% to account for ~3% inflation.

Can UK users model their ISA with this calculator?

Yes. The compound interest math is identical regardless of account type or currency. For a Stocks and Shares ISA, a reasonable long-term rate is 6–8% annually (after platform fees). For a Cash ISA, use current market rates (around 4–5% as of 2026). Since ISA returns are completely tax-free, no rate adjustment is needed — what you see is what you keep. Enter your monthly contribution in GBP and the results will be in the same currency.

Can Canadian users model their TFSA with this calculator?

Yes. The TFSA (Tax-Free Savings Account) is Canada's equivalent of the UK ISA — returns grow completely tax-free. The 2026 TFSA annual contribution limit is $7,000 CAD (roughly $583/month). Enter your expected monthly TFSA contribution and your investment's expected rate of return. For equity-heavy TFSA portfolios, 6–8% is a reasonable long-term estimate; for GIC or HISA-style TFSAs, use current rates of 3–5%. Enter amounts in CAD for CAD results.

Related Calculators

🎯

Savings Goal Calculator

Plan a specific savings target with a deadline

🧾

Freelancer Tax Calculator

Know what you owe so you can invest the rest