See exactly how your money grows over time. Adjust contributions, interest rate, and time period to model your investment.
| Year | Contributions | Interest | Balance |
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Open a free investment account in 5 minutes and start compounding for real.
Your initial investment is the starting balance. The more you start with, the faster compounding accelerates.
Each period, you earn interest on both your principal AND on previously earned interest. This is "interest on interest."
Over time, growth becomes exponential. The first decade is slow. The last decade is explosive. Time is your biggest lever.
Notice how the 40-year investor only contributes 2× the 20-year investor, but ends with ~6× more wealth. Time is the most powerful variable.
Compound interest is interest earned on both the original principal and on the accumulated interest from previous periods. It's often called "interest on interest" and causes investments to grow exponentially over time. Albert Einstein reportedly called it "the eighth wonder of the world."
A = P(1 + r/n)nt. Where A = final amount, P = principal, r = annual interest rate (as a decimal, so 8% = 0.08), n = number of times compounded per year, t = number of years. For monthly contributions, the formula becomes more complex and is best handled by a calculator like this one.
Compounding frequency varies by account type: daily (most high-yield savings accounts), monthly (mortgages, credit cards, many investment accounts), quarterly (some bonds), or annually (some CDs). Higher compounding frequency produces marginally higher returns — daily compounding gives ~0.5% more than annual at 8% rate.
The Rule of 72 is a quick way to estimate how long it takes for an investment to double. Divide 72 by the annual interest rate. Example: at 8% return, your money doubles in 72/8 = 9 years. At 12% return, it doubles in 6 years. This is a mental-math shortcut, not exact, but very close for rates between 6% and 10%.
This calculator assumes no withdrawals during the investment period. Withdrawing money reduces both your principal balance and future compound growth. For accurate projections that include withdrawals (e.g., during retirement), use a retirement drawdown calculator.
Historical averages: high-yield savings accounts (3–5%), bonds (4–6%), broad stock market index funds (7–10% historical average), individual stocks (highly variable). The S&P 500 has averaged ~10% annually since 1957, but with significant volatility. Conservative planning typically uses 6–8% for stock-heavy portfolios.
Yes. The "real" return is your interest rate minus inflation. If you earn 8% but inflation is 3%, your real return (purchasing power growth) is ~5%. For long-term planning, subtract expected inflation from your assumed rate of return to see results in today's dollars.