Compound Interest Calculator
Discover the exponential power of compound interest. Forecast your future net worth with regular deposits, customizable compounding periods, and annual inflation adjustments.
Total Future Balance
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In 20 years
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Initial + Contributions
Total Interest Earned
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Free money from compounding
Inflation-Adjusted Value
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Today's purchasing power
Investment Parameters
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Wealth Accumulation Trajectory
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Total Interest
Annual Growth Schedule
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Understanding the Compound Interest Formula
Compound interest occurs when the interest earned on your investment begins earning interest itself. The standard mathematical formula is:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where P is your initial principal, PMT is your periodic contribution, r is the nominal annual rate, n is compounding frequency per year, and t is time in years. Over extended periods, the compound interest portion will typically dwarf the total money you deposited out of pocket!
Frequently Asked Questions
What is a realistic annual rate of return to assume?
Historically, the US S&P 500 stock index has averaged roughly 10% annual nominal returns over long multi-decade horizons (or ~7% after inflation). High-yield savings accounts typically range between 4% and 5%, while conservative bond portfolios historically return 4% to 6%.
How does compounding frequency affect my returns?
The more frequently interest compounds (e.g. daily vs monthly vs annually), the slightly faster your money grows because gains are added back into the principal earlier. However, the difference between daily and monthly compounding is relatively modest compared to the impact of starting earlier and maintaining consistent monthly deposits.