Compound Interest Calculator
See how money grows over time — or work backwards from any goal. Toggle between 'Grow my savings' (forward) and 'Reach a goal' (reverse) to get the number you actually need.
Future Value
Estimate only. Not financial advice.
LedgerlyTools calculators use standard financial formulas — the same math financial advisors use. We're developers, not financial advisors. Results are estimates. See our methodology →
Year-by-Year Growth
| Year | Balance | Contributions | Interest Earned |
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How Compound Interest Works
Compound interest is the snowball effect of finance. When you invest, your money earns interest. In the next period, you earn interest on your original money and on the interest you previously earned. Over long periods, this compounding effect leads to exponential growth.
Starting early is the ultimate hack. If a 25-year-old invests $200 a month at an 8% return until age 65, they'll contribute $96,000 and end up with over $698,000. A 35-year-old making the exact same total contributions ($320 a month for 25 years) would end up with only about $303,000. Time is more important than timing.
The Rule of 72
The Rule of 72 is a quick mental math trick to figure out how long it will take for your money to double. You simply divide 72 by your expected annual return rate. For example, if you expect a 7% return, 72 / 7 = 10.28 years. Your money doubles roughly every 10 years without you adding another dime.
Why assume a 7% return?
Historically, the S&P 500 (an index of the 500 largest US companies) has returned an average of about 10% per year over the long run. However, inflation eats away at your purchasing power at an average rate of 2-3% per year. Using a 7% expected return is a common rule of thumb that represents "inflation-adjusted" growth, meaning the future value you calculate represents real purchasing power in today's dollars.
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods. Think of it as 'interest on interest,' allowing your wealth to grow exponentially over time.
What's a realistic rate of return to use?
Historically, the S&P 500 has returned around 10% annually before inflation, or about 7% after adjusting for inflation. Using 7% is a common, conservative baseline for long-term stock market investments.
How much should I be investing each month?
The amount depends on your goals and timeline. Use the 'Reach a goal' mode of this calculator to work backward from your target number to find exactly how much you need to contribute monthly.
Is compound interest the same as compound growth?
While technically different—interest applies to bank accounts and bonds, while growth applies to appreciating assets like stocks—the mathematical principles (and the formula) are identical. This calculator models both.