Compound Interest
Calculate compound interest with monthly contributions. See how your money grows over time.
Final balance
US$691,150.47
Total contributed
US$190,000.00
Total interest earned
US$501,150.47
Effective annual yield
7.229% APY
Money doubles in
10.3 years
Your money grew by 264% over 30 years. Of the final balance, US$190,000.00 came from your own contributions and US$501,150.47 came from interest on interest.
Breakdown
| Year | Balance | Contributed | Interest |
|---|---|---|---|
| 1 | US$16,919.19 | US$16,000.00 | US$919.19 |
| 2 | US$24,338.58 | US$22,000.00 | US$2,338.58 |
| 3 | US$32,294.31 | US$28,000.00 | US$4,294.31 |
| 4 | US$40,825.16 | US$34,000.00 | US$6,825.16 |
| 5 | US$49,972.70 | US$40,000.00 | US$9,972.70 |
| 6 | US$59,781.53 | US$46,000.00 | US$13,781.53 |
| 7 | US$70,299.43 | US$52,000.00 | US$18,299.43 |
| 8 | US$81,577.68 | US$58,000.00 | US$23,577.68 |
| 9 | US$93,671.22 | US$64,000.00 | US$29,671.22 |
| 10 | US$106,639.02 | US$70,000.00 | US$36,639.02 |
| 11 | US$120,544.25 | US$76,000.00 | US$44,544.25 |
| 12 | US$135,454.70 | US$82,000.00 | US$53,454.70 |
| 13 | US$151,443.02 | US$88,000.00 | US$63,443.02 |
| 14 | US$168,587.14 | US$94,000.00 | US$74,587.14 |
| 15 | US$186,970.62 | US$100,000.00 | US$86,970.62 |
| 16 | US$206,683.03 | US$106,000.00 | US$100,683.03 |
| 17 | US$227,820.45 | US$112,000.00 | US$115,820.45 |
| 18 | US$250,485.91 | US$118,000.00 | US$132,485.91 |
| 19 | US$274,789.85 | US$124,000.00 | US$150,789.85 |
| 20 | US$300,850.72 | US$130,000.00 | US$170,850.72 |
| 21 | US$328,795.53 | US$136,000.00 | US$192,795.53 |
| 22 | US$358,760.48 | US$142,000.00 | US$216,760.48 |
| 23 | US$390,891.60 | US$148,000.00 | US$242,891.60 |
| 24 | US$425,345.48 | US$154,000.00 | US$271,345.48 |
| 25 | US$462,290.03 | US$160,000.00 | US$302,290.03 |
| 26 | US$501,905.30 | US$166,000.00 | US$335,905.30 |
| 27 | US$544,384.37 | US$172,000.00 | US$372,384.37 |
| 28 | US$589,934.26 | US$178,000.00 | US$411,934.26 |
| 29 | US$638,776.94 | US$184,000.00 | US$454,776.94 |
| 30 | US$691,150.47 | US$190,000.00 | US$501,150.47 |
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Simple interest rewards only your original deposit. Compound interest also rewards the interest you've already earned, so the balance snowballs: more interest, on more interest, every month.
Change any input below and watch the 30-year outcome move. Most people are surprised by how much the starting date matters compared to the rate.
How compound interest works
Each period you earn interest on the principal. With compound interest, that interest is added to the balance and the next period's interest is calculated on the new, larger balance. Keep that going month after month and the curve stops being a line and starts being a hockey stick.
Three levers control the outcome: principal (how much you start with), rate (the annual return), and time (how long you leave it alone). Time is by far the strongest. Doubling your horizon beats doubling your contribution.
This calculator compounds monthly with contributions at the end of each month, the convention for most savings accounts and retirement plans. Daily or quarterly compounding shifts the final number by a few percent — same order of magnitude.
A = P·(1+r/n)^(n·t) + PMT·[((1+r/n)^(n·t) − 1)/(r/n)]
- A
- Final balance
- P
- Initial principal
- PMT
- Monthly contribution
- r
- Annual interest rate (decimal)
- n
- Compounding periods per year (12 for monthly)
- t
- Time in years
Practical examples
Starting early
Setup: You deposit $10,000 at 8% annual return, no additional contributions, for 30 years.
$10,000 × (1 + 0.08/12)^(12×30) ≈ $109,357
Takeaway: You multiplied your money by 10, without adding a cent. Waiting 10 years to start roughly halves the final balance. This is the compounding equivalent of 'you can't catch up later.'
Why contributions matter more than rate at first
Setup: Starting from $0, you contribute $500/month at 7% for 20 years.
Total contributed: $120,000. Final balance: ≈ $260,463. Interest earned: ≈ $140,463.
Takeaway: For the first decade, your own contributions drive most of the growth. After that, interest takes over. The longer you wait to start, the more work your rate has to do.
Rate vs. time trade-off
Setup: Option A: $500/month at 6% for 30 years. Option B: $500/month at 9% for 20 years.
Option A: ≈ $502,257. Option B: ≈ $334,182.
Takeaway: Ten extra years at a lower rate beat higher returns over a shorter window. Time usually wins.
Practical tips
- Automate. Set up a transfer on payday. You won't miss money you never see in your checking account.
- Don't chase rate. Anything advertising much over 12% annual in a stable market is hiding risk somewhere. A reliable 7–8% over decades beats a 15% shot that eventually blows up.
- Watch the fees. A 1% annual fee over 30 years can eat a quarter of your final balance. Low-cost index funds or ETFs where possible.
- Think in real terms. Inflation quietly taxes everything. A 7% nominal return with 3% inflation is really 4%. Still good, just less exciting than the poster.
When this calculator is not the right tool
Compound interest math assumes a constant rate and regular contributions. Real investments fluctuate. Use this to set expectations and model scenarios, not to predict the future.
For variable-return investments (stocks, crypto), consider running the calculation with your expected average, then again with a pessimistic rate, to see the range of possible outcomes.
For debt (credit cards, loans), compound interest works against you — principal and rate mechanics are the same but you're the one paying. Use a loan or credit card interest calculator in that case.
Frequently asked questions
What's the difference between compound interest and simple interest?▾
Simple interest earns only on the original principal forever. Compound interest earns on principal plus all previously earned interest. Over 30 years at 7%, $10,000 grows to $17,000 with simple interest and $76,000 with monthly compounding — more than four times the gap.
Does compounding frequency really matter?▾
$10,000 at 5% for 30 years: annual compounding ≈ $43,219; monthly ≈ $44,677; daily ≈ $44,814. The jump from annual to monthly is noticeable (≈3% better); monthly to daily is a rounding error. Most real accounts compound monthly or daily; pick one and stop worrying.
What interest rate should I use for retirement planning?▾
Use a REAL rate (after inflation), not a nominal one. The conservative range most planners use is 5-7% real. Avoid double-optimism: don’t plug 10% into the calculator AND ignore inflation. If you want to model nominal, also enter an inflation rate so the real balance shows up.
Is compound interest taxable?▾
It depends on the account. Regular US taxable brokerage: yes, interest is taxed as ordinary income each year. IRA/401k/Roth: tax-deferred or tax-free. Brazilian CDB: IR is regressive (22.5% under 6 months down to 15% over 2 years). LCI/LCA: IR-free. Poupança: IR-free. For planning, use your after-tax rate if the account is taxable.
Can I lose money with compound interest?▾
In a traditional savings account where the rate is guaranteed, no — you can only earn a positive (even if tiny) amount. In market-linked investments that people colloquially describe as "earning compound interest" (stocks, funds), yes, returns are variable and can be negative. This calculator assumes a constant positive rate — treat it as an idealization, not a guarantee.
What's the rule of 72?▾
Shortcut for how long it takes money to double: 72 ÷ annual rate ≈ years to double. At 6%, you double in 12 years; at 9%, about 8 years. It’s an approximation, not exact — works within ±5% for rates between 4% and 15%.
Should I reinvest dividends to get compound interest on stocks?▾
Yes, whenever possible. Stocks technically don’t pay "interest" — they pay dividends and grow in price. But reinvesting dividends produces the same compounding effect. Historically, dividend reinvestment accounts for roughly 40% of the S&P 500’s total long-term return. Most brokers offer DRIP (Dividend Reinvestment Plan) for free.
Sources & references
Cross-check every number in this calculator against the primary sources below.