Compound Interest Calculator
See how savings, a 401(k), IRA, or brokerage account grows with compound interest and monthly contributions.
What is a compound interest calculator?
A compound interest calculator projects how a starting balance grows when the interest it earns is added to the balance and itself earns interest. Enter your starting amount, a monthly contribution, an annual rate, the number of years and how often interest compounds, and it shows the future value, how much of it you put in, and how much is growth.
Compounding is why time matters more than the amount when saving: the interest earned in year 20 is calculated on twenty years of accumulated interest, not just on what you deposited. Use the calculator for a savings account, a CD, a 401(k), an IRA, a brokerage account, or a child's 529 plan — anywhere returns are reinvested.
What $500 a month becomes
Starting with $10,000 and adding $500 a month at a 7% annual return (compounded monthly):
| Years | You contributed | Growth | Balance | Growth as share of balance |
|---|---|---|---|---|
| 5 | $40,000 | $9,973 | $49,973 | 20% |
| 10 | $70,000 | $36,639 | $106,639 | 34% |
| 15 | $100,000 | $86,971 | $186,971 | 47% |
| 20 | $130,000 | $170,851 | $300,851 | 57% |
| 25 | $160,000 | $302,290 | $462,290 | 65% |
| 30 | $190,000 | $501,150 | $691,150 | 73% |
| 40 | $250,000 | $1,225,521 | $1,475,521 | 83% |
By year 20 more than half the balance is growth rather than deposits; by year 40 it is five-sixths. The last ten years add more than the first thirty combined.
The cost of starting late
Saving $500 a month at 7% from age 25 to 65 produces about $1,312,000. Starting at 35 and saving the same amount to 65 produces about $610,000. The ten-year delay costs $60,000 in missed contributions and roughly $640,000 in missed growth — the early dollars are the ones that compound longest.
How much the rate matters
$500 a month for 30 years:
| Annual return | Balance after 30 years | Typical of |
|---|---|---|
| 4% | $347,025 | High-yield savings, CDs, bonds |
| 7% | $609,985 | Long-run stock market average after inflation |
| 10% | $1,130,244 | Long-run stock market average before inflation |
The S&P 500 has returned about 10% a year on average over the past century before inflation, or roughly 7% after it. Use 7% for a retirement projection in today's dollars, and remember that any single decade can be far above or below the average.
Compounding frequency: how much does it matter?
Less than people think. $10,000 at 5% for 10 years:
| Compounded | Balance after 10 years | Effective annual rate (APY) |
|---|---|---|
| Yearly | $16,288.95 | 5.000% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
Going from yearly to daily compounding adds under $200 on $10,000 over a decade. The rate and the time horizon dominate; frequency is a rounding error by comparison. Banks quote APY (annual percentage yield), which already includes the effect of compounding, so two accounts with the same APY pay the same regardless of how often they compound.
The Rule of 72
Divide 72 by the annual rate to estimate how many years it takes money to double: at 7% about 10.3 years (the exact figure is 10.2), at 10% about 7.2 years, at 4% about 18 years. It also works in reverse for inflation — at 3% inflation, prices double roughly every 24 years, which is why a retirement projection should use a real (after-inflation) return.
Where compounding works hardest: tax-advantaged accounts
In a taxable brokerage account, dividends and realised gains are taxed every year, which slows compounding. In a 401(k), traditional IRA, Roth IRA, HSA or 529 plan, growth compounds untaxed until withdrawal (or tax-free in a Roth or HSA). For 2026 the employee 401(k) contribution limit is $24,500 ($32,500 with the age-50 catch-up), and the IRA limit is $7,500 ($8,600 with catch-up) — check the current IRS figures, which rise most years. An employer 401(k) match is an immediate 50%–100% return before any compounding, and should be the first dollar you save.
Formula
Growth of the starting balance:
A = P × (1 + r ÷ n)n × t
- A = final amount
- P = starting balance
- r = annual rate as a decimal (7% → 0.07)
- n = compounding periods per year (1, 4, 12 or 365)
- t = years
Monthly contributions are added with the future-value-of-an-annuity formula, using the monthly rate m = (1 + r ÷ n)n ÷ 12 − 1 so that it matches the chosen compounding frequency:
FVcontributions = C × ((1 + m)12t − 1) ÷ m
Future value = A + FVcontributions; interest earned = future value − (P + C × 12t). Contributions are assumed to arrive at the end of each month. The effective annual rate (APY) for any nominal rate is (1 + r ÷ n)n − 1.
Worked example
$10,000 to start, $500 a month, 7% a year, 20 years, compounded monthly:
- Starting balance: 10,000 × (1 + 0.07 ÷ 12)240 = 10,000 × 4.0387 = $40,387
- Monthly rate m = 0.07 ÷ 12 = 0.005833
- Contributions: 500 × ((1.005833)240 − 1) ÷ 0.005833 = 500 × 520.93 = $260,464
- Future value = 40,387 + 260,464 = $300,851
- Total invested = 10,000 + 500 × 240 = $130,000
- Interest earned = 300,851 − 130,000 = $170,851
The same $10,000 left alone, with no contributions, becomes $40,387 in 20 years, $81,165 in 30, and $163,114 in 40 — it doubles roughly every ten years at 7%.
How to use this calculator
- Enter the starting balance — what is in the account today (0 is fine).
- Enter the monthly contribution you plan to add.
- Enter the expected annual rate of return. Use the account's APY for savings and CDs; 7% is a reasonable after-inflation assumption for a diversified stock portfolio.
- Enter the number of years, and choose how often interest compounds (monthly for most savings accounts; the choice makes little difference).
- Read the future value, the total you contributed, and the growth.
Using it for retirement planning
- Work in today's dollars. Use a real return (about 7% for stocks, 2% for bonds) and the result is directly comparable to today's prices.
- Include the employer match. If you contribute 6% of a $75,000 salary ($375 a month) and your employer matches half, enter $562 a month.
- Test the downside. Run 5% as well as 7%. A plan that only works at 10% is a hope, not a plan.
- Increase contributions over time. The calculator assumes a fixed amount; raising it with each pay rise makes the real result considerably better than the projection.
Related tools
- Retirement calculator — will your savings last?
- Savings goal calculator — the monthly amount needed to hit a target by a date
- Simple interest calculator — interest without compounding
- Savings with interest calculator — bank-account growth with deposits
Frequently asked questions
What return should I assume for retirement projections?
For a diversified stock portfolio, about 7% a year after inflation (roughly 10% before), based on a century of U.S. market history; for a 60/40 stock-bond mix, about 5%. Use the after-inflation figure so the result is in today's dollars. Assuming more than 7%–8% is optimistic, and any individual decade can be well above or below the average.
What is the Rule of 72?
A shortcut for doubling time: divide 72 by the annual rate. At 7% money doubles in about 10 years, at 10% in about 7, at 4% in 18. It is accurate to within a few months for rates between 4% and 12%. It also shows the cost of debt: a credit card at 24% doubles the balance in three years if unpaid.
Should I max out my 401(k) before a Roth IRA?
The usual order: contribute enough to the 401(k) to get the full employer match (free money), then fund a Roth IRA up to its limit if you are eligible, then go back and increase the 401(k). A Roth is attractive if you expect to be in a higher tax bracket in retirement or want tax-free withdrawals; a traditional 401(k) wins if you are in a high bracket now. Many people do some of both.
How do taxes affect compound interest?
In a taxable account, interest and dividends are taxed each year and gains when sold, which removes part of the balance that would otherwise compound. Over 30 years that drag can cost a quarter or more of the final value. Tax-advantaged accounts — 401(k), IRA, Roth, HSA, 529 — let the full balance compound untouched, which is why they should be filled first.
Is APR the same as APY?
No. APR is the nominal annual rate before compounding; APY includes it. A 5% APR compounded monthly is a 5.116% APY. Banks advertise APY on savings (the larger number) and APR on loans (the smaller number). When comparing savings accounts, compare APY to APY.
How often should interest compound?
It matters far less than the rate. On $10,000 at 5% for 10 years, yearly compounding gives $16,289 and daily gives $16,487 — a difference of under 1.3%. Choose an account by its APY (which already reflects compounding) and its fees, not by how often it compounds.
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal: $10,000 at 5% earns $500 every year, forever. Compound interest is paid on principal plus accumulated interest: $500 in year one, $525 in year two, $551 in year three, and $776 by year ten. Most savings accounts and investments compound; some short-term loans and bonds use simple interest.
Can compound interest work against me?
Yes — it is exactly how credit-card debt grows. A $5,000 balance at 24% APR with only minimum payments takes decades to clear and costs more in interest than the original purchase. The same math that builds a retirement account drains a household that carries revolving debt, which is why paying off high-rate debt is the highest guaranteed "return" available.