Compound Interest Calculator
See how savings, a 401(k), IRA, or brokerage account grows with compound interest and monthly contributions.
What is Compound Interest Calculator?
Compound interest is interest earned on both your original balance and the interest already accumulated. Over decades it produces the snowball effect that makes early investing so powerful — a dollar saved at age 25 can be worth ten or more dollars at 65.
Use this calculator to project a 401(k), Roth IRA, Traditional IRA, HSA, taxable brokerage, or high-yield savings account. The S&P 500 has historically returned about 7% per year above inflation; high-yield savings accounts currently return in the 4–5% range.
Formula
The basic compound interest formula is:
A = P (1 + r / n)n t
- A = final amount
- P = starting balance
- r = annual rate (decimal)
- n = number of compounding periods per year
- t = time in years
For monthly contributions, the future value of an annuity formula is added on top of the growth of the starting balance.
Worked example
Invest $10,000 at a 7% average annual return, compounded monthly, for 20 years, adding $500 every month:
- Starting balance grows to ≈ $40,387
- $120,000 of contributions grows to ≈ $260,463
- Future value ≈ $300,850
- Interest earned ≈ $170,850
How to use this calculator
- Enter your current balance in the account.
- Enter how much you plan to contribute each month. For a 401(k), include your employer match.
- Enter the annual return you expect. Long-run U.S. stock market average has been about 7% real (after inflation) or 10% nominal.
- Enter your time horizon in years.
- Pick how often interest compounds. Most investment accounts compound continuously (treat as daily); savings accounts usually compound monthly.
Frequently asked questions
What return should I assume for retirement projections?
Financial planners commonly use 6%–7% for a stock-heavy portfolio after inflation, or 8%–10% nominal. For savings accounts and CDs, use the quoted APY. Being conservative protects you from unpleasant surprises if markets underperform.
What is the Rule of 72?
Divide 72 by your annual return to estimate the years it takes for an investment to double. At 7%, money doubles roughly every 10 years. At 10%, about every 7 years.
Should I max out my 401(k) before a Roth IRA?
Most planners suggest contributing to your 401(k) at least up to the employer match (free money), then maxing a Roth IRA (for tax diversification), then coming back to max the 401(k). The 2026 contribution limits are typically published by the IRS each fall.
How do taxes affect compound interest?
Taxes on interest and capital gains slow compounding because the tax removes money that would otherwise reinvest. This is why tax-advantaged accounts (401(k), IRA, Roth IRA, HSA, 529) are so valuable over long time horizons.
Is APR the same as APY?
No. APR (annual percentage rate) is the nominal rate before compounding; APY (annual percentage yield) includes the effect of compounding. When comparing savings accounts, compare APYs. When comparing loans, compare APRs.