Compound Interest Calculator

See the power of compounding in action, and why time is our greatest asset.

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Why Compound Interest is the 8th Wonder of the World

Compound interest is often called the “eighth wonder of the world” by financial experts, and for good reason. It's the powerful force that turns small, regular investments into substantial wealth over time. Unlike simple interest, which only earns on your initial investment, compound interest earns interest on both your principal and the accumulated interest from previous periods.

The Power of Time and Consistency

The earlier you start investing, the more dramatic the effects of compound interest become. A $10,000 investment at 7% annual return grows to over $76,000 in 30 years, but the same investment would be worth nearly $200,000 if given 40 years to compound.

Key takeaway: Time is your greatest ally in wealth building. Starting early, even with small amounts, can lead to extraordinary results through the power of compounding.

Regular Deposits Amplify Growth

Adding regular deposits to your compound interest strategy creates exponential growth. Monthly contributions of just $500 at 7% annual return can grow to over $1.2M in 30 years.

Why it works: Each deposit gets the full benefit of compound interest, creating a snowball effect where your money works harder for you over time.

Real-World Examples of Compound Interest

$1,000
Initial Investment
$7,612
After 30 years at 7%
$500/month
Regular Deposits
$1.2M
After 30 years at 7%
10.5%
S&P 500 Average
$2.3M
$500/month for 30 years

💡 Investment Strategies That Leverage Compound Interest

  • Index Funds: Low-cost, diversified investments that track market performance
  • Retirement Accounts: 401(k)s and IRAs offer tax advantages that enhance compound growth
  • Dollar-Cost Averaging: Regular investments regardless of market conditions
  • Reinvesting Dividends: Using dividend payments to buy more shares

🚀 Start Your Compound Interest Journey Today

The best time to start investing was yesterday. The second best time is today. Use this compound interest calculator to visualize your potential wealth growth and create a personalized investment strategy that works for your financial goals.

Remember: Past performance doesn't guarantee future results. Consider consulting with a financial advisor for personalized investment advice.

About Compound Interest

How It Works

Compound interest is the interest earned on both your initial investment and the accumulated interest from previous periods. When combined with regular deposits, this creates exponential growth over time.

Formula:

A = P(1 + r/n)^(nt) + D[((1 + r/n)^(nt) - 1)/(r/n)]

Where: A = Final amount, P = Principal, r = Annual rate, n = Compounding frequency, t = Time, D = Regular deposits

Key Benefits

  • Regular deposits accelerate wealth building
  • Higher compounding frequency increases returns
  • Time is your greatest ally - start early
  • Even small regular deposits create significant wealth