How much will my money grow with compound interest?
With the default inputs, your money grows to $196,665 in 20 years, and 58% of that is growth. For the first 7 years your own deposits add more each year than the growth does. From year 8, growth adds more, and the lead keeps widening.
| After | You put in | Growth | Balance | Buying power at 2.5% inflation |
|---|---|---|---|---|
| 5 years | $28,000 | $7,654 | $35,654 | $31,513 |
| 10 years | $46,000 | $26,022 | $72,022 | $56,264 |
| 15 years | $64,000 | $59,578 | $123,578 | $85,326 |
| 20 years | $82,000 | $114,665 | $196,665 | $120,019 |
| 25 years | $100,000 | $200,276 | $300,276 | $161,966 |
| 30 years | $118,000 | $329,156 | $447,156 | $213,178 |
The last column is the one to plan with. $196,665 in 20 years buys what $120,019 buys today at that inflation rate. The calculator shows both, and you can change the inflation assumption under More options.
Working backward from a target? Enter a Savings goal under More options and the results show the deposit it takes. To turn $10,000 into $500,000 in 20 years at the same example rate, you'd need about $882 a month. And if you add nothing at all, $10,000 left alone for 30 years reaches $81,165. Set the frequency to None to see that case.
Is daily compounding better than monthly?
Yes, but by very little. On $10,000 at 5% for 10 years, daily compounding beats monthly by $16.56 in total. Raising the rate to 5.25% with monthly compounding adds $415.15.
| Compounding | Effective annual rate | Final balance | Interest |
|---|---|---|---|
| Annually | 5% | $16,288.95 | $6,288.95 |
| Semiannually | 5.062% | $16,386.16 | $6,386.16 |
| Quarterly | 5.095% | $16,436.19 | $6,436.19 |
| Monthly | 5.116% | $16,470.09 | $6,470.09 |
| Daily | 5.127% | $16,486.65 | $6,486.65 |
| Continuously | 5.127% | $16,487.21 | $6,487.21 |
So don't choose a savings account because it compounds daily. Compare the APY, which already includes compounding. Banks don't have to compound at any particular frequency, but they do have to disclose the APY.
The Rule of 72: how long does it take to double your money?
Divide 72 by your annual rate to estimate the years to double. At 8% that's about 9 years. It's a rule of thumb for mental math. It's closest near 8% and drifts at very low and very high rates.
| Rate | Rule of 72 | Exact | Off by (years) |
|---|---|---|---|
| 2% | 36.0 | 35.0 | 1.00 |
| 3% | 24.0 | 23.4 | 0.55 |
| 4% | 18.0 | 17.7 | 0.33 |
| 5% | 14.4 | 14.2 | 0.19 |
| 6% | 12.0 | 11.9 | 0.10 |
| 7% | 10.3 | 10.2 | 0.04 |
| 8% | 9.0 | 9.0 | 0.01 |
| 10% | 7.2 | 7.3 | 0.07 |
| 12% | 6.0 | 6.1 | 0.12 |
| 15% | 4.8 | 5.0 | 0.16 |
| 20% | 3.6 | 3.8 | 0.20 |
| 25% | 2.9 | 3.1 | 0.23 |
The bigger trap is using the wrong rate. The rule only tells you about the rate you actually keep. A 7% return doubles the dollars in about 10.2 years. With 2.5% inflation, the real rate is 4.39%, so doubling your buying power takes about 16.1 years. The same math runs against you on debt: a balance at an example 24% that you don't pay down doubles in about 3 years.
How much difference does starting earlier make?
A lot more than the extra deposits explain. At an example 7%, starting at 25 instead of 35 adds $36,000 in deposits and $421,453 to the final balance.
| Start at | You put in | Balance at 65 | Growth |
|---|---|---|---|
| 25 | $144,000 | $787,444 | $643,444 |
| 30 | $126,000 | $540,316 | $414,316 |
| 35 | $108,000 | $365,991 | $257,991 |
| 40 | $90,000 | $243,022 | $153,022 |
| 45 | $72,000 | $156,278 | $84,278 |
| 55 | $36,000 | $51,925 | $15,925 |
Now a sharper comparison. Someone who saves $300 a month from 25 to 35, then stops and adds nothing more, puts in $36,000 and ends at $421,453 at 65. Someone who starts at 35 and never stops puts in $108,000 and ends at $365,991. Those early deposits have 30 to 40 years to compound.
These tables use one steady rate so the effect of time is easy to see. Real investment returns vary and can be negative, and the only returns known in advance are stated rates on savings products. The investment calculator shows a simulated range instead.
The compound interest formula with monthly contributions
The balance is your starting amount with growth, plus the growth on each deposit. When deposits and compounding are both monthly:
A = P(1 + r/n)^(nt) + PMT × ((1 + r/n)^(nt) − 1) ÷ (r/n)P is the starting amount, PMT is the deposit, r is the annual rate as a decimal, n is compounding periods per year, and t is years. With the default inputs, r/n is 0.005833 and nt is 240, which gives $196,665.39.
In Excel or Google Sheets, the same result comes from =FV(0.07/12, 20*12, -300, -10000). The negative signs mean money you pay in.
Deposit timing matters a little. The formula assumes each deposit lands at the end of the month. Choosing Start of period raises the balance to $197,577, or $912 more.
What can make your real result smaller than this?
- Fees. A 1% annual fee cuts the 20-year balance from $196,665 to $171,474. The fee also takes away the growth that money would have earned.
- Tax on growth. In a taxable account, part of each year's growth may go to taxes. Enter a rate under Yearly tax on growth, or leave it at 0 for a tax-advantaged account.
- A rate that doesn't hold. Savings rates can change, and market returns swing. A steady line is a math illustration.
If you're weighing where to hold long-term money, a tax professional or a registered investment adviser can look at your full picture. The compound growth guide walks through how time, fees, tax, and inflation combine.
Common questions
How do you calculate compound interest for 5 years by hand?
Multiply by (1 + rate) once per year. $1,000 at 6% compounded annually becomes $1,060.00, then $1,123.60, then $1,191.02, then $1,262.48, then $1,338.23. Each year's interest is larger because the balance is larger.
How is daily compound interest calculated?
Divide the annual rate by 365 and compound it 365 times a year: balance = P × (1 + r ÷ 365)^(365 × t). A 5% rate compounded daily has an effective annual rate of 5.127%.
What interest rate should I enter?
For a savings account or CD, use the stated rate with its compounding, or the APY with annual compounding. For investments, there's no known rate. Try several, including low ones, and don't treat any of them as a promise.
Can I use this for a 401(k) or Roth IRA?
For the growth math, yes. But the 401(k) calculator adds employer match and contribution limits, and the IRA calculator compares Roth and Traditional taxes.
Does it handle withdrawals or partial years?
No. This tool uses whole years and only adds money. The interest calculator handles days and months, and the retirement calculator models spending from a balance.
Sources
- What is compound interest? · U.S. Securities and Exchange Commission, Investor.gov
- Compound interest calculator · U.S. Securities and Exchange Commission, Investor.gov
- How fees and expenses affect your investment portfolio · U.S. Securities and Exchange Commission
- Regulation DD § 1030.7: payment of interest · Consumer Financial Protection Bureau
- FV function · Microsoft