Estimated Future Wealth
Estimated Future Wealth
Total Contributions
$0
Growth Earnings
$0
Compound interest is the interest calculated on the initial principal and the accumulated interest from previous periods. This means your money grows faster over time because you're earning interest on your interest.
The starting amount you invest. This forms the base for compound growth.
Regular monthly deposits accelerate your savings growth significantly over time.
Higher interest rates and longer time horizons dramatically increase your final balance through compounding.
Compound interest means you earn interest on both your initial investment and the interest that has already been earned. For example, if you invest $1,000 at 5% annual interest, after one year you'll have $1,050. In year two, you'll earn 5% on $1,050, not just the original $1,000, resulting in $1,102.50. This compounding effect accelerates over time.
This calculator assumes monthly compounding, which is common for savings accounts and many investment vehicles. Interest is calculated and added to your balance each month, allowing for maximum growth potential.
Interest rates vary by account type. High-yield savings accounts typically offer 4-5% APY, while investment accounts (stocks, bonds) may average 7-10% annually over long periods. Certificates of Deposit (CDs) offer fixed rates, usually 3-5%. Always research current rates and consider your risk tolerance.
Both matter, but consistent monthly contributions often have a greater impact over time due to compounding. Even small monthly contributions can grow significantly over decades. Start with what you can afford and increase contributions as your income grows.
Simple interest only calculates interest on the principal amount. Compound interest calculates interest on the principal plus previously earned interest. Over long periods, compound interest can result in 2-3x more growth than simple interest.
This calculator provides estimates based on fixed interest rates and regular contributions. Real investments (stocks, bonds) have variable returns. Use this as a planning tool, but remember actual results will vary based on market conditions and investment choices.