Compound Interest
See how a starting balance plus regular contributions can grow, year by year, with compound interest.
How compound interest grows your money
Compound interest means each round of interest is added to your balance and then earns interest itself. Left alone, savings grow slowly at first and then accelerate, because the balance doing the earning keeps getting bigger. Add regular contributions on top and the effect is stronger still, since every deposit starts compounding the moment it lands.
This calculator simulates your balance month by month. It applies growth using the effective rate for your chosen compounding frequency, then adds your monthly contribution, and records the balance at the end of each year for the table.
A worked example
Start with 1,000, add 100 a month, and assume 6% a year compounded monthly for 20 years. You contribute 1,000 + (100 * 240) = 25,000 of your own money. Compound growth turns that into roughly 49,500, so about 24,500 is interest you never deposited. Run it for 30 years instead and the balance passes 100,000 - the extra decade does most of the heavy lifting, which is why starting early matters so much.
The rule of 72
For a quick sanity check, divide 72 by your interest rate to estimate how long money takes to double. At 6% that is about 12 years, at 9% about 8 years. It ignores contributions but is a useful gut check against the precise figure above.
One caveat: these are nominal figures, before inflation and tax. To see growth in today's spending power, subtract your expected inflation rate from the interest rate first. Planning around a loan instead of savings? Compare with the loan calculator or the mortgage calculator, and use the percentage calculator to check any rate along the way.
Contributions versus a bigger head start
A common question is whether it is better to invest a large lump sum now or drip-feed smaller amounts monthly. Try both in the fields above. Over short horizons a lump sum wins clearly, because more money compounds for longer. Over 20 or 30 years, though, steady monthly contributions catch up remarkably well and are far easier to sustain from a normal income, which is why regular investing suits most people better than waiting to save a big deposit.