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Compound Interest Calculator
See how your money grows with compound interest over time.
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The Crazy Power of Compound Interest
Albert Einstein supposedly called compound interest "the eighth wonder of the world." Whether he actually said it or not, he wasn't wrong. This is how $10k can turn into $70k+—without you doing anything after the initial investment.
💡 Real Talk from David Chen, CFA
Start at 25, put $200/month into an index fund averaging 8% return. By 65, you'll have ~$700k. Start at 35 instead? Only ~$300k. That 10-year delay cost you $400k. Stop reading articles about compound interest and just start investing—literally today.
A Real Example
Let's say you're 25 with $5,000 saved:
- Scenario 1: Put it in a savings account (0.5% interest). In 40 years: $6,100. Cool.
- Scenario 2: Invest it (average 8% return). In 40 years: $109,000. What.
Same money. Same timeline. 18x difference. That's compound interest doing its thing.
⚠️ Common Mistake: Waiting for the "Perfect Time"
"I'll start investing when I make more money" is how you lose decades of compound growth. Even $50/month at 25 beats $500/month at 45. Time beats money every single time with compounding.
The Math (Simplified)
Formula: A = P(1 + r/n)^(nt)
Translation: Your final amount = what you start with × (1 + interest rate) raised to the power of time.
The crazy part? That exponent. It's why year 40 adds more than years 1-10 combined.
Quick Rules
Rule of 72: Want to know how long it takes to double your money? Divide 72 by your interest rate. 8% return = 72÷8 = 9 years to double.
Monthly beats annually: $10k invested monthly at 7% beats the same amount invested annually. More frequent compounding = more free money.
Reviewed by David Chen, CFA
Chartered Financial Analyst
David helps people stop overthinking and start investing.
Frequently Asked Questions
What is compound interest?
Interest on your interest. Year 1 you earn interest on $10k. Year 2 you earn interest on $10k + last year's interest. It snowballs. This is why early investing matters—it's not about having more money, it's about having more time.
How often should interest compound?
More frequent = better. Daily is best, monthly is standard, annual is okay. The difference isn't huge though—7% compounded monthly vs daily only differs by ~0.05% over a year. Don't stress about it.
What's the Rule of 72?
Quick way to see how long it takes to double your money. Divide 72 by your interest rate. At 8% return: 72 ÷ 8 = 9 years to double. At 6%: 12 years. Simple mental math that actually works.