How this calculator works
Compound interest means you earn interest on your interest. Each period the balance grows, so the next period starts from a larger base. Over long periods this snowball effect does most of the work, which is why starting early matters more than contributing a lot.
Use the monthly contribution field to see how regular deposits change the outcome, and compare monthly with daily compounding.
Formula
Balance after each month = previous balance × (1 + monthly rate) + contribution. Monthly rate = (1 + annual rate ÷ m)^(m ÷ 12) − 1, where m is the compounding periods per year.
Frequently asked questions
What return should I assume?
Broad U.S. stock indexes have averaged roughly 7% to 10% a year before inflation over long periods, but individual years vary a lot. Use a conservative number when planning.
What is the rule of 72?
Divide 72 by your annual return to estimate how many years it takes to double your money. At 8% it takes about 9 years.
Does compounding frequency matter much?
Only a little. Daily compounding at 5% yields about 5.13% a year versus 5.12% monthly. Return rate and time matter far more.
Are the results guaranteed?
No. Stock returns vary every year and are not guaranteed. Savings accounts and CDs pay a stated rate, but it can change. Treat the output as an illustration, not a forecast.