Compound Interest Calculator
See how your money can grow exponentially over time. Small contributions today become significant wealth tomorrow.
in 20 years
The Power of Compound Interest
Albert Einstein reportedly called compound interest the "eighth wonder of the world." Unlike simple interest (which only earns on your original principal), compound interest earns interest on your interest—creating exponential growth over time.
💡 The Key Insight
Time is your greatest asset. Starting to invest at 25 instead of 35 can mean 2-3x more wealth at retirement, even with the same monthly contributions.
The Rule of 72: A Quick Doubling Estimator
The Rule of 72 is a simple mental math trick to estimate how long it takes to double your money:
Years to Double = 72 ÷ Annual Return Rate
| Return Rate | Years to Double | Example |
|---|---|---|
| 4% | 18 years | Bonds, savings |
| 7% | 10.3 years | Balanced portfolio |
| 10% | 7.2 years | S&P 500 historical avg |
| 12% | 6 years | Growth stocks |
How $10,000 Grows Over Time
Here's what a one-time $10,000 investment becomes at different rates and time periods:
| Time | At 5% | At 7% | At 10% |
|---|---|---|---|
| 10 years | $16,289 | $19,672 | $25,937 |
| 20 years | $26,533 | $38,697 | $67,275 |
| 30 years | $43,219 | $76,123 | $174,494 |
Key insight: At 10%, your money grows 17x in 30 years. Add regular contributions, and the results are even more dramatic.
Frequently Asked Questions
How often should interest compound?
More frequent compounding is better. Daily compounding beats monthly beats quarterly beats annually. However, the difference is often small. Annual vs daily compounding on a 7% return differs by about 0.25% per year.
What's a realistic rate of return to assume?
The S&P 500 has historically returned about 10% annually (before inflation) or 7% after inflation. For conservative planning, use 6-7%. For optimistic projections, use 8-10%. Never assume more than 10-12% for long-term planning.
Should I pay off debt or invest?
Compare rates: if your debt interest (e.g., 20% credit card) exceeds expected investment returns (7-10%), pay off debt first. But always contribute enough to get any 401(k) employer match—that's an instant 50-100% return.