RETIREMENT · FUNDAMENTALS

Compound Interest Calculator

Calculate how your money grows with compound interest. Choose monthly, quarterly, or annual compounding and add regular contributions to see the power of compounding over time.

LAST REVIEWED · APR 08, 2026 · BY A. CHEN, CFP®
You need
$144,573
Investment DetailsReset
Starting amount
$10,000
$0$1M
Regular contributionPer month
$200
$0$10,000
Interest rateAnnual
7%
0.5%15%
Time period
20 yrs
150
Compounding frequency
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How compound interest works

Compound interest is interest earned on both your original principal and previously earned interest. The more frequently interest compounds, the faster your money grows — though the difference between monthly and annual compounding is smaller than most people think.

The power of time

A $10,000 investment at 7% annual return grows to $19,672 in 10 years, $38,697 in 20 years, and $76,123 in 30 years. The growth accelerates because each year’s interest earns interest in subsequent years.

Regular contributions amplify the effect

Adding just $200/month to a $10,000 starting balance at 7% grows to $109,000 in 20 years — more than double the result without contributions. Start early, contribute consistently, and let compounding do the heavy lifting.

Methodology. FV = P(1+r/n)^(nt) + PMT×((1+r/n)^(nt)−1)/(r/n), where P is principal, r is annual rate, n is compounding frequency, t is time in years, and PMT is the periodic contribution.

Sources

  • Standard compound interest formula (FV of lump sum + FV of annuity)
  • SEC Investor Education — Compound Interest Calculator methodology
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Frequently asked questions

What’s the difference between compound and simple interest? +
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest. Over long periods, compounding dramatically outperforms simple interest.
How often should interest compound? +
More frequent compounding (daily vs monthly vs annual) produces slightly higher returns, but the difference is marginal. The rate and time matter far more than compounding frequency.
What rate should I use for retirement planning? +
7% nominal (before inflation) or 4–5% real (after inflation) for a diversified stock/bond portfolio. Use the lower end for conservative planning.
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