Enter your initial investment, monthly contribution, expected annual return rate, and investment timeline in years. The calculator shows your projected final balance, broken down into total contributions vs. interest earned.

Use the Advanced Options to adjust compounding frequency (daily, monthly, quarterly, or annually), inflation rate for real-value projections, and annual contribution increase percentage to model salary-growth-driven savings increases.

Albert Einstein reportedly called compound interest "the eighth wonder of the world." Whether or not that attribution is accurate, the math behind compounding truly is remarkable — and understanding it is fundamental to building wealth.

Simple vs. Compound Interest

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously accumulated interest. Over time, this difference becomes dramatic. A $10,000 investment at 8% simple interest grows to $18,000 in 10 years. The same investment at 8% compound interest grows to $21,589 — an extra $3,589 from interest earning interest.

The Rule of 72

A quick way to estimate how long it takes to double your money: divide 72 by your annual return rate. At 8%, your money doubles in approximately 9 years (72 ÷ 8 = 9). At 10%, it doubles in about 7.2 years. This rule highlights why even small differences in return rates matter enormously over decades.

Why Starting Early Matters

Consider two investors: Alice starts investing $300/month at age 25 and stops at 35 (10 years, $36,000 contributed). Bob starts investing $300/month at age 35 and continues until 65 (30 years, $108,000 contributed). At an 8% average annual return, Alice ends up with approximately $472,000 at age 65, while Bob has $440,000. Alice contributed three times less money but ended up with more — because her money had more time to compound.

Inflation's Impact on Real Returns

Our calculator includes an inflation adjustment to show your future balance in today's purchasing power. If your investments earn 8% but inflation averages 3%, your real return is approximately 5%. This is why it's important to view projections in both nominal and inflation-adjusted terms.