Compound Interest Calculator
See how your investment grows over time with the power of compounding — including regular monthly contributions.
| Year | Balance | Interest This Year | Total Contributions | Total Interest |
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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 earns only on the original amount), compounding snowballs — each period's interest becomes part of the base for the next.
Albert Einstein is often (perhaps apocryphally) credited with calling compound interest "the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it." Whether or not he said it, the math backs it up.
Why Starting Early Doubles Your Result
Consider two investors who each contribute $500/month at 7% annually. Investor A starts at age 25 and stops at 35 (10 years, $60,000 contributed). Investor B starts at 35 and invests until 65 (30 years, $180,000 contributed). At age 65, Investor A — despite contributing three times less — ends up with roughly the same or more than Investor B. Starting just 10 years earlier, even then stopping entirely, nearly matches 30 years of later contributions. Time in the market is the most powerful variable.
Formula Used
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)] — where P is principal, r is annual rate, n is compounding frequency per year, t is years, and PMT is the periodic contribution (converted to match n).