See exactly how your savings or investment grows over time with compounding interest.
Use A = P(1 + r/n)^(nt), where P is your starting principal, r is the annual rate as a decimal, n is compounds per year, and t is years. Example: $10,000 at 7% compounded monthly for 20 years grows to $40,388 — $30,388 in interest earned.
Compound interest means your interest earns interest. Each period, the interest you've already earned gets added to your principal, and the next period's interest is calculated on that larger amount. The longer you stay invested, the more powerful this effect becomes.
The formula is A = P(1 + r/n)^(nt), where P is your starting principal, r is the annual rate as a decimal, n is how many times per year interest compounds, and t is years. This calculator handles all of that for you, including optional monthly contributions.
With simple interest, you earn the same dollar amount each year. With compound interest, you earn more each year because your balance grows. On a $10,000 investment at 7% over 30 years: simple interest returns $31,000. Compound interest returns over $76,000. The gap widens every year.
More frequent compounding means slightly higher returns. Daily compounding beats monthly, which beats annual. In practice, the difference between daily and monthly compounding is small on typical balances, but it adds up over decades. High-yield savings accounts typically compound daily.
A quick shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, money doubles in about 12 years. At 8%, about 9 years. It's not exact, but it's accurate enough for quick planning decisions.
Adding a regular monthly contribution dramatically accelerates growth. Even $200 per month added to a $10,000 starting balance at 7% grows to over $214,000 in 20 years — versus $38,697 without contributions. Consistent contributions combined with compound interest is the core mechanic behind most retirement savings strategies.