Compound Interest Calculator

Compound interest earns interest on both your original principal and previously accumulated interest. Each period, your earnings are added to your balance, and the next period's interest is calculated on that larger amount. Over time this creates exponential growth — the longer you invest, the faster your balance grows. At 7% return, $10,000 grows to over $76,000 in 30 years without any additional contributions.

For savings accounts, high-yield savings accounts currently offer 4–5% APY. For long-term investing in broad stock market index funds, the historical average annual return is roughly 7–10% before inflation. For conservative retirement planning, many financial planners use 6–7% as a real (inflation-adjusted) return assumption.

It depends heavily on your time horizon and assumed rate of return. At 7% annual return, investing $500/month for 40 years grows to approximately $1.3 million. Investing $1,000/month for 30 years reaches roughly $1.2 million. The earlier you start, the less you need to contribute each month — time is your greatest asset.

Compounding frequency is how often interest is calculated and added to your balance — annually, quarterly, monthly, or daily. More frequent compounding means your interest starts earning interest sooner, producing slightly higher returns. The difference is real but modest: at 7%, monthly compounding produces about 0.23% more per year than annual compounding over a long period.

The Rule of 72 is a mental math shortcut to estimate how long it takes to double your money. Divide 72 by your annual return rate. At 7% return, your money doubles every 72 ÷ 7 ≈ 10.3 years. At 10% return, every 7.2 years. It's accurate enough for rough planning and useful for building intuition about how rates affect long-term growth.

Yes — simple interest only earns on the original principal, never on accumulated interest. $10,000 at 7% simple interest earns exactly $700 every year, reaching $31,000 in 30 years. At compound interest, that same $10,000 grows to $76,000 — more than twice as much — because each year's earnings are reinvested to generate their own earnings.