The compound interest formula
With regular monthly contributions, each deposit grows for the time remaining. The calculator simulates every month, so it handles any combination of starting amount, deposits and compounding frequency exactly.
Why starting early matters so much
Because growth builds on itself, time matters more than the amount. Someone who invests 200 a month from age 25 to 35 and then stops can end up with more at 65 than someone who invests 200 a month from 35 to 65, assuming the same 7% return, despite paying in a third as much. The first ten years have three extra decades to compound.
The rule of 72
A quick mental shortcut: divide 72 by the yearly rate to find roughly how many years it takes money to double. At 6% it doubles in about 12 years; at 9%, about 8 years. It works for debt too: at 24% credit-card interest, a balance doubles in about 3 years.
Choosing a realistic rate
- Savings accounts: roughly the central bank rate or below; check your bank.
- Bonds: typically a few percent above inflation.
- Diversified stock funds: long-term averages of 6–10% a year before inflation in major markets, but with large ups and downs, and no guarantee.
For a picture of future buying power, use a "real" rate: the expected return minus inflation (for example 7% − 3% = 4%).
How often is interest compounded?
More frequent compounding earns slightly more: 7% compounded monthly is equivalent to 7.23% a year. The difference between monthly and daily is tiny. Banks show this as the AER or APY.
This calculator is for illustration. Investments can fall as well as rise; consider taxes and fees, and get advice for important decisions.
Frequently asked questions
How do I calculate compound interest?
A = P × (1 + r/n)^(n × t), where P is the starting amount, r the yearly rate, n the compounding periods per year and t the years.
How much will 10,000 grow in 20 years?
At 7% a year compounded monthly, 10,000 grows to about 40,400 with no extra deposits (38,700 compounded yearly). With 200 a month added, it reaches about 144,600.
What is the rule of 72?
Divide 72 by the interest rate to estimate how many years it takes money to double. At 8%, about 9 years.
Is monthly or yearly compounding better?
Monthly is slightly better: 7% compounded monthly equals 7.23% compounded yearly.
Does this include inflation?
No. Subtract expected inflation from the rate to see growth in today’s money.
Last updated October 2026 · More finance & business