Compound Interest Calculator
How much will your money be worth when invested over time? This calculator helps you visualize how compound interest grows your money and how small changes — like starting earlier or contributing more — can have a dramatic long-term impact.
Summary
After 29.98 years, you will have a total portfolio value of $1,030,479.
This is a total gain of $773,822 off of an initial investment of $10,000 and a total investment of $256,657.
Your initial dollars invested will have grown 904.68%.
Your entire portfolio will have grown 301.50%.
Tip: Compound interest’s most powerful ally is time. Try extending the time frame above to see how much additional growth time alone can create.
Important: Values shown are estimates intended for educational purposes only. Real-world investment returns are volatile and unpredictable. This information is not financial or legal advice. Consult a qualified professional for guidance specific to your situation.
Using This Calculator
This interactive calculator and graph are designed to help you visualize how compound interest works over time.
- Hover or scroll over the graph to reveal additional data.
- The blue area represents the total amount you’ve contributed up to a given point.
- The orange area represents the total value of your portfolio.
- The difference between the two shows your total investment gains.
Seeing these values grow over time highlights why compound interest is such a powerful force for long-term investors.
What Is Compound Interest?
Compound interest is the process of earning interest not only on your original investment, but also on the interest you’ve already earned. Over time, this creates a snowball effect where your money grows faster and faster.
It’s the primary mechanism that makes investing so effective and enables concepts like the FIRE movement.
In simple terms:
You earn interest on your initial investment plus any interest that investment has already generated.
This differs from simple interest, where interest is calculated only on your original principal.
A Simple Example
- Year 1: You invest $1,000 at a 5% annual return. You earn $50, bringing your total to $1,050.
- Year 2: You now earn 5% on $1,050, resulting in $52.50 in interest.
- Year 3 and beyond: The process repeats, and your earnings grow larger each year.
This accelerating growth is why compound interest is often (likely apocryphally) attributed to Albert Einstein as “the eighth wonder of the world.”
Compound Interest Formula
The standard compound interest formula is:
T = I(1 + r/n)^(n × t)
Where:
- T = Total value after time
t - I = Initial investment
- r = Annual rate of return (as a decimal)
- n = Number of compounding periods per year
- t = Time in years
Example: Calculating Compound Interest Step-by-Step
Let’s say you invest $10,000 at an annual return of 5%, compounded quarterly (4 times per year), for 10 years.
Step 1: Plug in the values
T = 10,000 × (1 + 0.05 ÷ 4)^(4 × 10)
Step 2: Simplify
T = 10,000 × (1.0125)^40
Step 3: Calculate
T ≈ 10,000 × 1.643619
T ≈ $16,436.19
Result: After 10 years, your investment grows to approximately $16,436, meaning you’ve earned about $6,436 in interest.
Compound Interest vs. Simple Interest
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculation | Initial principal only | Principal + accumulated interest |
| Growth Pattern | Linear | Exponential |
| Interest Earned | Same every period | Increases over time |
| Best For | Short-term loans | Long-term investing |
| Example (10 years @ 5%, $10,000) | $15,000 | $16,436 |
While both methods help money grow, the way interest is calculated creates dramatically different outcomes over time.
Simple Interest
- Interest is calculated only on your original principal
- Growth is linear
- Total gains increase at a steady, predictable rate
Compound Interest
- Interest is calculated on principal plus previously earned interest
- Growth is exponential
- Gains accelerate over time
Why This Difference Matters
Simple interest may be sufficient for short-term borrowing, but for long-term investing, compound interest is far more powerful. The longer your money remains invested, the more dramatic the difference becomes.
Tips for Maximizing Compound Interest
Compound interest works best when given time and consistency. Here are practical ways to maximize its impact:
-
Start Early
Time is your greatest advantage. Even small investments can grow significantly over decades. -
Contribute Regularly
Consistent contributions accelerate growth by continuously increasing your principal. -
Reinvest Earnings
Reinvesting dividends and interest allows your gains to generate additional gains. -
Choose Frequent Compounding
Daily or monthly compounding typically produces higher returns than annual compounding. -
Seek Higher Returns Responsibly
Higher returns can increase growth, but always balance return potential with risk tolerance. -
Avoid Unnecessary Withdrawals
Withdrawals reduce the amount that can compound over time. -
Use Tax-Advantaged Accounts
Accounts like IRAs and 401(k)s reduce tax drag and allow compounding to work more efficiently.
Frequently Asked Questions (FAQs)
What is the formula for compound interest?
T = I(1 + r/n)^(n × t)
Where T is the final amount, I is the initial investment, r is the annual rate, n is the compounding frequency, and t is time in years.
How is compound interest different from simple interest?
Simple interest applies only to the original principal, while compound interest applies to both principal and accumulated interest. Over time, this makes compound interest significantly more powerful.
What is the best compounding frequency?
More frequent compounding generally leads to faster growth. Daily compounding is typically the most advantageous, followed by monthly, quarterly, and annual compounding.
Can compound interest work against me?
Yes. Debt with compound interest — such as credit cards — can grow rapidly if balances aren’t paid off. In these cases, compounding increases what you owe.
How does inflation affect compound interest?
Inflation reduces purchasing power. To grow wealth in real terms, your investment returns must outpace inflation over time.
Learn more about Compound Interest
Scenarios, tradeoffs, and comparisons.
What Happens If You Start Investing 5 Years Later?
→See how delaying investing by 5 years affects long-term growth. Compare starting now vs later and explore the impact using our compound interest calculator.
11 min read · Updated 01/07/2026
How Much $500 a Month Can Grow in 20, 30, or 40 Years
→See how investing $500 a month can grow over 20, 30, or 40 years. Explore realistic returns and use our compound interest calculator to model your own path.
14 min read · Updated 01/07/2026
How Much $10,000 Can Grow in 20 Years
→See how much $10,000 can grow in 20 years at different rates of return. Use our compound interest calculator to adjust assumptions.
13 min read · Updated 01/05/2026