Compound Interest Calculator
Calculate investment growth with compound interest and regular contributions. Plan your financial future with our free investment growth calculator.
Compound Interest Calculator
Calculate investment growth with compound interest and regular contributions
Starting amount you have to invest
Amount added each month
Expected annual return rate
Investment Scenarios:
Investment Growth
Investment Insights
Rule of 72
At 7% annual return, your money doubles every 10.3 years
Next Milestone
$500K - Half million portfolio
Growth Breakdown:
Investment Account Types
401(k)
Employer-sponsored retirement account
Traditional IRA
Individual retirement account
Roth IRA
Tax-free growth retirement account
Taxable Account
Regular investment account
Time & Compound Interest
The Power of Time
Starting early makes a huge difference. Each year you delay reduces your compound growth significantly.
Key Principles:
Understanding Compound Interest
What Makes Compound Interest Powerful?
Compound interest is often called the "eighth wonder of the world" because of its remarkable ability to grow wealth over time. Unlike simple interest, which only earns on the principal, compound interest earns on both the principal and previously earned interest.
Example: The Power of Time
$10,000 invested at 7% for 20 years:
Simple interest: $24,000
Compound interest: $38,697
Extra gain: $14,697 (61% more!)
Key Factors for Growth:
- • Principal: Your starting investment amount
- • Interest Rate: Annual return percentage
- • Time: How long your money grows
- • Compounding Frequency: How often interest is added
- • Regular Contributions: Additional monthly investments
Investment Growth Strategies
Conservative Strategy (4-5%)
CDs, bonds, high-yield savings accounts. Lower risk, steady growth.
Balanced Strategy (6-8%)
Mix of stocks and bonds. Moderate risk with solid long-term returns.
Growth Strategy (9-12%)
Stock-heavy portfolio. Higher risk but greater long-term potential.
💡 Investment Tips
- • Start investing as early as possible
- • Make regular monthly contributions
- • Don't try to time the market
- • Diversify your investments
- • Reinvest dividends and returns
The Magic of Starting Early
| Starting Age | Monthly Investment | Total Invested | Value at 65 | Interest Earned |
|---|---|---|---|---|
| 25 | $500 | $240,000 | $1,348,000 | $1,108,000 |
| 35 | $500 | $180,000 | $610,000 | $430,000 |
| 45 | $500 | $120,000 | $265,000 | $145,000 |
| 55 | $500 | $60,000 | $83,000 | $23,000 |
🎯 Key Takeaway
Starting at age 25 vs. 35 (just 10 years earlier) results in $738,000 moreat retirement, despite only investing $60,000 more. This demonstrates why time is your most valuable investment asset.
Compounding Frequency Comparison
How often interest compounds affects your returns. Here's how $10,000 grows over 20 years at 7% with different compounding frequencies:
Annually
Semi-annually
Quarterly
Monthly
Daily
📊 Analysis
Daily compounding only adds about $1,855 more than annual compounding over 20 years. While more frequent compounding helps, the effect is relatively small compared to factors like time, interest rate, and regular contributions.
Retirement Planning with Compound Interest
401(k) and IRA Limits 2025
401(k) Contributions
• Age 50+ catch-up: $30,500
• Employer match: Varies by company
IRA Contributions
• Age 50+ catch-up: $8,000
• Income limits may apply
💰 Max Contributions Example
$23,000 401(k) + $7,000 IRA = $30,000/year
Over 30 years at 7%: $2,830,000
Total invested: $900,000 | Interest: $1,930,000
Investment Milestones
Frequently Asked Questions
How much should I invest each month?
A common rule is to save/invest 10-20% of your income. Start with what you can afford, even if it's just $50-100/month. The key is consistency and gradually increasing contributions as your income grows.
Is 7% a realistic investment return?
The S&P 500 has averaged about 10% annually over the past 90 years, but this includes high volatility. Many financial planners use 6-8% for conservative planning. Remember that past performance doesn't guarantee future results.
Should I pay off debt or invest first?
Generally, pay off high-interest debt (>8-10% APR) first, especially credit cards. For lower-interest debt like mortgages, you might invest simultaneously since investment returns may exceed the debt interest rate over time.
What if the market crashes right before I retire?
This is called sequence of returns risk. Diversification and having a bond allocation can help. Many retirees use the "4% rule" - withdrawing 4% annually from their portfolio to make it last 30+ years through various market conditions.