See how your savings or investments grow with compound interest. Add a monthly contribution to see the full power of consistent saving over time.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the principal), compound interest earns interest on interest — causing your money to grow exponentially over time.
Albert Einstein reportedly called compound interest the "eighth wonder of the world." Whether or not he actually said it, the sentiment is accurate: the longer your money compounds, the more powerful the effect becomes.
For a lump sum: A = P × (1 + r/n)^(nt) where P is principal, r is annual rate, n is compounds per year, and t is time in years. This calculator compounds monthly (n=12) which is standard for most savings accounts and investments.
A quick mental shortcut: divide 72 by your annual return rate to estimate how many years it takes your money to double. At 7%, money doubles every ~10 years. At 10%, every ~7 years. This rule works surprisingly well for rates between 6% and 10%.
Adding even a small amount monthly dramatically accelerates growth. Starting with $10,000 at 7% for 20 years gives you ~$38,700. But adding $500/month turns that into over $300,000 — almost 8 times more — because each contribution also compounds over the remaining time.