Compound Interest Calculator

Interest earned on your original money and on the interest already added. Because each period's earnings join the balance, growth accelerates over time rather than staying flat — which is why the final years of a long plan contribute far more than the first.

Simple interest is always calculated on the original principal only. Compound interest is calculated on the running balance. Over one year the difference is negligible; over thirty it is the entire point.

Use A = P(1 + r/n)^(n·t), where P is the principal, r the annual rate as a decimal, n the compounding periods per year and t the years. For $10,000 at 8% compounded monthly for 25 years: 10000 × (1 + 0.08/12)^(12 × 25) ≈ $73,402.

You add the future value of an annuity: FV = P(1+i)^N + PMT × [((1+i)^N − 1) / i], where i is the periodic rate and N the number of periods. This page does not use that formula directly, because it cannot express fees, tax, escalating contributions or withdrawals — a month-by-month simulation can.

A mental shortcut: divide 72 by the annual return to estimate the years needed to double your money. At 8% that is about 9 years. It is an approximation and drifts at high rates, but it is remarkably good in the 4% to 12% range.

The result panel splits this out explicitly. On a typical 25-year plan with steady contributions, growth commonly accounts for around two-thirds of the closing balance — and the crossover where annual growth first exceeds annual contributions is visible in the year-by-year table.

There is no correct answer, only a defensible one. Many people use 6% to 8% for a diversified equity portfolio as a long-run planning figure, and lower for bonds or cash. Run the calculation two or three times across a range rather than trusting one number.

For a savings account, use whatever the bank states. For stocks and funds, the concept does not strictly apply — returns are continuous and uneven — so monthly or annual is a reasonable convention. The comparison table shows how little the choice changes the outcome.

The mathematical limit as the compounding interval approaches zero, given by A = P·e^(r·t). It is the theoretical ceiling: at 8%, continuous compounding produces an 8.33% effective rate, essentially identical to daily.

Because most incomes rise, and a fixed dollar contribution quietly shrinks in real terms every year. Setting the escalation to match expected pay rises makes a plan realistic; setting it to match inflation keeps your saving rate constant in real terms.

If you are paid every two weeks, yes — 26 payments a year is meaningfully more than 12 payments of the same size, and the calculator uses the correct annual total. The within-year timing is approximated to monthly steps, which has a negligible effect over a long horizon.

Yes. It is a useful sanity check — modeling a sustained decline shows how quickly a withdrawal plan fails when returns do not cooperate, which a positive-only calculator hides from you.

Use the copy-link button. Every input is encoded in the URL, so bookmarking or sending that link reproduces the scenario exactly. Nothing is stored on our servers.

Because a balance thirty years out is denominated in future dollars, which buy less. Dividing by cumulative inflation restates it in today's purchasing power. That second figure is the one to plan around; the first is the one that looks good in a brochure.

Long-run US inflation has averaged roughly 2.5% to 3%. Central banks in developed economies commonly target 2%. Using 2.5% is a reasonable default; if your plan only works at 0% inflation, it does not work.

More than almost anyone expects, because the fee is charged on the whole balance every year and therefore compounds against you. Run the same plan at 0.03% and 0.75% and compare the fees total — on a long horizon the gap is routinely a six-figure sum.

For a tax-sheltered account such as a 401(k), IRA or ISA, enter 0. For a taxable brokerage account, enter the rate you expect to pay on annual gains and dividends. The model is a simplification and is not a substitute for tax advice.

Once a year, at a single rate, to that year's investment gain after fees, and only when that figure is positive. There is no loss carry-forward, no bracket modeling, and no distinction between realized and unrealised gains — those would each change the answer and depend on your jurisdiction.

After. Each month the balance grows, then the pro-rata fee is deducted from the resulting assets, then the contribution is added. This matches how a fund expense ratio actually behaves.

It is the money-weighted return: the internal rate of return over the real monthly cash flows, annualised. Unlike a start-to-end percentage it does not count your own deposits as growth, so it answers what you earned on the money while it was actually invested.

Those show a gross nominal figure. Set inflation, fees and tax to 0 here and the headline number will line up with them. The difference is entirely the real-world drag they omit.

No. It applies a constant return every year. That is fine for comparing plans and understanding the mechanics, but it materially understates risk during a withdrawal phase, where the order of returns matters as much as the average.

The danger that poor returns arrive early in retirement, when withdrawals are eating into a shrinking balance. Two portfolios with identical average returns can end very differently depending on the order those returns arrive. A constant-rate model cannot show this, so treat the drawdown output as a best case.

The simulation flags the first month the balance reaches zero after withdrawals, and reports the year that falls in. Because returns are constant, the real-world date is uncertain and could easily be earlier.

Check three conventions: whether contributions land at the start or end of the period, whether your formula uses the nominal or the effective rate, and whether fees are applied to the balance before or after growth. Those three account for nearly every discrepancy people report.

Yes, sanity bounds: up to 80 years, returns from −50% to 100%, and fees up to 10%. They exist to keep the arithmetic meaningful, not to restrict legitimate use.