Compound Interest Calculator
Calculate how your investments grow with compound interest over time
📚 How To Use the Compound Interest Calculator
- Enter Initial Investment: Your starting investment amount
- Set Monthly Contributions: Additional money you'll invest monthly
- Input Interest Rate: Expected annual return percentage
- Choose Time Period: How long you plan to invest
- Select Compounding: How often interest is calculated
- Review Results: See your projected growth and breakdown
🧠 Understanding Compound Interest
What is Compound Interest?
Interest earned on both your original investment and previously earned interest. It's "interest on interest" that accelerates growth over time.
The Power of Time
The longer your money is invested, the more powerful compounding becomes. Starting early gives you a significant advantage.
Compounding Frequency
More frequent compounding (daily vs. annually) results in slightly higher returns, but the difference is usually small.
The Rule of 72
Divide 72 by your interest rate to estimate how long it takes to double your money. At 8%, it takes about 9 years (72÷8=9).
💡 Investment Strategies for Compound Growth
Start Early
Time is your greatest asset. Even small amounts invested early can grow significantly due to compound interest.
Invest Regularly
Consistent monthly contributions through dollar-cost averaging can reduce risk and boost long-term returns.
Reinvest Dividends
Automatically reinvesting dividends and interest maximizes the compounding effect of your investments.
Minimize Fees
High fees can significantly reduce your returns over time. Choose low-cost index funds and ETFs when possible.
Stay Invested
Avoid trying to time the market. Stay invested through market ups and downs to benefit from long-term growth.
Increase Contributions
Gradually increase your investment amounts as your income grows to accelerate wealth building.
🎯 Common Investment Scenarios
Retirement Planning
Typical Rate: 6-8% annually
Time Horizon: 20-40 years
Strategy: Diversified portfolio with stocks and bonds
Education Savings
Typical Rate: 5-7% annually
Time Horizon: 10-18 years
Strategy: Age-based investment allocation
House Down Payment
Typical Rate: 3-5% annually
Time Horizon: 3-10 years
Strategy: Conservative investments and savings
Emergency Fund
Typical Rate: 1-3% annually
Time Horizon: Immediate access
Strategy: High-yield savings accounts