See the power of compound interest and watch your money grow
Enter your starting balance, monthly contribution, expected annual return and time horizon. The calculator shows the future value, your total contributions, and the interest earned on top — making it easy to see how much of your final balance is pure investment growth.
More frequent compounding = slightly more growth. Most brokerage accounts compound daily/monthly.
For monthly contributions, future value = PMT × [(1 + r/12)^(12t) − 1] / (r/12), where PMT is the monthly amount, r the annual return, and t the years. Compounding means you earn interest on earlier interest — the longer the horizon, the more dramatic the growth.
Starting with $10,000 and adding $500 per month at a 7% annual return for 30 years grows to about $691,150. Of that, only $190,000 is money you actually contributed — the other $501,150 is interest earned on interest.
Compound interest is interest earned on both your original investment and the interest that investment has already earned. Over time, this creates a snowball effect where your money grows faster and faster. Einstein called it the "eighth wonder of the world."
The S&P 500 has averaged about 10% annually over the long term (before inflation). A conservative estimate of 7% (after inflation) is often used for retirement planning. Your actual returns will vary based on your investment mix and market conditions.
Compound interest needs time to work its magic. Money invested in your 20s has more decades to compound than money invested in your 30s or 40s. The difference can be hundreds of thousands of dollars at retirement.