Compound Interest Calculator
See how your money grows with the power of compound interest — enter a starting amount, add monthly contributions, and choose a time horizon.
Future Value
$130,346
Total Invested
$70,000
Interest Earned
$60,346
How compound interest works
With simple interest, you earn the same dollar amount each year on your original deposit. With compound interest, you earn interest on your interest — the balance grows faster as time passes because a larger balance earns more interest each period.
The formula for a lump sum compounding annually:
- P — Initial principal
- r — Annual interest rate (as a decimal)
- t — Time in years
- A — Future value
The impact of time
Time is the most powerful variable in compound interest. A $10,000 investment at 7% annual return:
| Years | Future Value | Interest Earned |
|---|---|---|
| 10 years | $19,672 | $9,672 |
| 20 years | $38,697 | $28,697 |
| 30 years | $76,123 | $66,123 |
| 40 years | $149,745 | $139,745 |
Starting with $10,000 at 7%: 40 years of compounding earns 14× more interest than 10 years.
The Rule of 72
A quick mental shortcut: divide 72 by your expected annual return to find how many years it takes to double your money.
- →At 4% (high-yield savings): doubles in 18 years
- →At 7% (index fund average): doubles in ~10 years
- →At 10% (aggressive equity): doubles in 7.2 years
Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which is calculated only on principal), compound interest grows exponentially — the longer the time horizon, the more dramatic the effect.
How is compound interest calculated?
For a lump sum: A = P × (1 + r/n)^(n×t), where P is principal, r is annual rate, n is compounding frequency, and t is time in years. With monthly contributions, each contribution compounds independently from the month it is made.
How often does compound interest compound?
Compounding frequency varies by account type. Savings accounts often compound daily or monthly. Index funds and ETFs compound effectively as dividends are reinvested. This calculator uses annual compounding, which is a conservative and common assumption for long-term investment projections.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6% annual return, money doubles in approximately 12 years (72 ÷ 6). At 9%, it doubles in 8 years.
See your real investment growth
TrackWorth tracks your actual portfolio value month by month — so you can compare your real returns against projections like the ones above.
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