See how compound interest grows your money over time.
This is your starting amount — it can be any lump sum you're investing today.
How much you plan to add each month. Even small amounts compound powerfully over time.
Enter your expected annual return. The S&P 500 has averaged about 10% historically.
How many years you plan to invest. The longer, the more dramatic the compounding effect.
See your total balance, total contributions, and total interest earned over time.
Where A = final amount, P = principal, r = annual rate, n = compounding frequency, t = years, PMT = monthly contribution.
Starting to invest at 25 vs 35 can mean 2x more retirement savings due to compound interest.
Always maximize your employer 401(k) match — it's essentially free money you're leaving on the table.
Compound interest means you earn interest on your original investment AND on previously earned interest. Simple interest: $10,000 at 8% = $800/year forever. Compound interest: Year 1 = $800, Year 2 = $864, Year 3 = $933... After 30 years, $10,000 becomes $100,627 with compounding vs. $34,000 with simple interest. The difference is $66,627 — that's the power of compounding.
The Rule of 72 tells you how long it takes to double your money: divide 72 by your annual return rate. At 8% return: 72 ÷ 8 = 9 years to double. At 6%: 12 years. At 10%: 7.2 years. At 4% (savings account): 18 years. This rule works for any compound growth and helps you quickly compare investment options without a calculator.
At different annual return rates, $10,000 grows to: 4% → $21,911 | 6% → $32,071 | 8% → $46,610 | 10% → $67,275 | 12% → $96,463 after 20 years with no additional contributions. Add $200/month and those numbers jump dramatically: at 8%, you'd have $163,548 ($10K initial + $48K contributed + $105K in compound returns).
The difference is smaller than most people think. $10,000 at 5% for 10 years: Annual compounding = $16,289 | Monthly = $16,470 | Daily = $16,487. The difference between annual and daily is only $198 over 10 years. What matters far more is: the interest rate itself, how long you invest, and how much you add regularly.
At 8% average annual return: starting at age 25, you need $286/month to reach $1M by 65. Starting at 30: $436/month. Starting at 35: $671/month. Starting at 40: $1,051/month. Every decade of delay roughly doubles the required monthly investment. Start as early as possible — time is the most powerful ingredient in compound growth.