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Compound Interest Calculator — Free Online Calculator

Initial Investment

Monthly Contribution

Annual Interest Rate

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Investment Growth

Future Value
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Interest Earned

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Effective Annual Rate

Understanding Compound Interest

Compound interest is interest earned on both your original investment AND the interest that has already accumulated. Einstein reportedly called it the "eighth wonder of the world." The formula is: A = P(1 + r/n)^(nt) where P is principal, r is annual rate, n is compounds per year, and t is years.

The Power of Time

Starting early matters more than investing more. $200/month invested at 7% from age 25 grows to $528,000 by 65. Starting at 35 (same contributions) yields only $244,000 — less than half. Those first 10 years of compound growth account for $284,000 in difference.

The Rule of 72

A quick mental math trick: divide 72 by your interest rate to estimate how many years it takes to double your money. At 7% return: 72/7 = roughly 10.3 years to double. At 10%: about 7.2 years.

Frequently Asked Questions

What is a good rate of return?

The S&P 500 has averaged about 10% annually (7% after inflation) historically. A balanced portfolio typically targets 6-8% real returns long-term.

Monthly vs. annual compounding — does it matter?

Monthly compounding earns slightly more. At 7% on $10,000 over 20 years: annual compounding = $38,697, monthly = $40,387. The difference grows with higher rates and longer periods.

How much should I invest monthly?

A common guideline is 15-20% of gross income for retirement. Start with whatever you can — even $50/month benefits from compounding. Increase contributions as your income grows.

Does this account for inflation?

No. For inflation-adjusted estimates, subtract 2-3% from your expected return rate. If you expect 7% returns, use 4-5% to see real purchasing power.