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Calculate how your savings and investments grow over time with compound interest
Starting with $10,000 and adding $500 per month for 30 years at 7% annual return yields approximately $632,000. Total contributions: $190,000. Interest earned: $442,000 — more than double your contributions.
A savings plan starting with $5,000 and adding $100 per month for 10 years at 4.5% yields approximately $22,700. Total contributions: $17,000. Interest earned: $5,700.
A one-time investment of $50,000 compounded quarterly at 8% for 20 years grows to approximately $244,700. That is nearly 5x your original investment with zero additional contributions.
Compound interest is interest earned on both your initial principal and on previously earned interest. Unlike simple interest (calculated only on the principal), compound interest grows exponentially over time, making it one of the most powerful concepts in finance.
More frequent compounding produces slightly higher returns, but the difference is usually small. Monthly vs annual compounding might add 0.1-0.3% extra per year. The biggest factors are your interest rate, time horizon, and regular contributions.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate: at 8% return, your money doubles in about 9 years (72/8 = 9). At 6%, it takes about 12 years.