See how your money grows over time with the power of compound interest and regular contributions.
Future Value
$302,370
Total Contributions
$130,000
Total Interest Earned
$172,370
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only earns interest on the original amount, compound interest allows your money to grow exponentially over time. This is often called the "eighth wonder of the world" — the longer your money compounds, the faster it grows.
Formula
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where A = future value, P = principal, r = annual interest rate (decimal), n = compounding frequency per year, t = time in years, and PMT = periodic contribution amount.
The initial amount of money you invest or deposit. This is your starting point — the seed money that will grow through compounding.
How often interest is calculated and added to your balance. More frequent compounding (e.g., monthly vs. annually) results in slightly higher returns because interest earns interest sooner.
The effective annual rate of return taking compounding into account. APY is always equal to or higher than the stated annual interest rate (APR) when compounding occurs more than once per year.
The length of time your money stays invested. Time is the most powerful factor in compound interest — even small amounts can grow substantially over decades.
Sarah invests $10,000 at age 25 with a 7% annual return, compounded monthly, and adds $500 per month.
Result: Sarah's $190,000 in total contributions grew to $631,452 — earning $441,452 in interest alone. That's more than 2.3× her total contributions, all thanks to compound interest.