See how your savings or investments grow over time with compound interest and optional regular contributions.
Compound interest is interest earned on both your original money and the interest it has already earned. Because each period's interest gets added to the balance, your money grows faster and faster over time — a snowball effect Albert Einstein reputedly called "the eighth wonder of the world."
A = P(1 + r/n)nt, where P is the principal, r is the annual rate, n is the number of times interest compounds per year, and t is the number of years.
Time is the most powerful ingredient in compound growth. Investing $5,000 at 7% for 30 years grows to about $38,000 — but the same amount over just 15 years reaches only about $13,800. The extra 15 years more than doubles the result, even though you didn't add a cent more. This is why starting to save early, even in small amounts, beats starting later with larger sums.
Adding a fixed amount each month supercharges compounding. A $5,000 start with $200 added monthly at 7% over 20 years grows to roughly $124,000 — of which more than half is interest you never deposited. Consistent contributions combined with time and a reasonable rate are the foundation of long-term wealth building.
The more often interest compounds, the more you earn, though the difference shrinks at higher frequencies. Daily compounding edges out monthly, which beats annual — but the gap between daily and monthly is small compared to the impact of the rate, the time horizon, and your contributions. Focus first on those three levers.
The future value formula is A = P(1 + r/n)^(nt). This calculator also adds your monthly contributions and compounds them along the way, so the result reflects both your deposits and the interest they earn.
Simple interest is calculated only on the original principal, so it grows in a straight line. Compound interest is calculated on the principal plus all previously earned interest, so it grows exponentially — the longer the time frame, the bigger the gap.
More frequent compounding earns slightly more. Daily beats monthly beats annual, but the differences are modest. The interest rate, the length of time, and how much you contribute matter far more than the compounding frequency.
Savings accounts typically pay 1–5%, while long-term stock market returns have historically averaged around 7% after inflation. Use a conservative figure for planning and remember that real returns vary year to year.