Compound Interest Calculator
Calculate the future value of your investment with compound interest.
The "Secret" to Building Wealth Isn't a Secret
Albert Einstein reportedly called compound interest the "eighth wonder of the world." It's not a secret, but it's the most powerful force in finance. This calculator shows you why. By earning "interest on your interest," a small, consistent investment can grow into a substantial nest egg over time. Use this tool to visualize how your money can work for you, and see the real impact of starting early and staying invested.
How to Project Your Growth
To see the power of compounding, you only need a few inputs:
- Principal Amount: The initial amount of money you're investing.
- Annual Interest Rate: Your expected yearly return. For index funds, a long-term average is often estimated at 8-10%.
- Years: How long you plan to let the investment grow.
- Compounding Frequency: How often the interest is calculated and added to your principal. Annually (1) is common for stocks, while savings accounts may be quarterly (4) or monthly (12).
The calculator will instantly show the future value of your investment, separating your initial principal from the total interest earned.
Frequently Asked Questions (FAQ)
Q: What's the Rule of 72?
A: The Rule of 72 is a mental math shortcut to estimate how long it will take to double your money. Just divide 72 by your annual interest rate. For example, at an 8% annual return, your money will roughly double in 9 years (72 / 8 = 9).
Q: Why is compounding frequency important?
A: The more frequently interest is compounded, the faster your money grows. Compounding monthly is better than compounding annually, because you start earning interest on your interest sooner. Over long periods, this can make a significant difference.