Quick lookup
Compound interest projections (monthly compounding, no contributions)
Quick reference for what a starting amount grows to at common rates. Add monthly contributions to dramatically increase the final number.
| Principal | 5 yr @ 6% | 10 yr @ 6% | 20 yr @ 8% | 30 yr @ 8% | 40 yr @ 8% |
|---|---|---|---|---|---|
| $1,000 | $1,349 | $1,819 | $4,927 | $10,936 | $24,273 |
| $5,000 | $6,744 | $9,097 | $24,636 | $54,679 | $121,365 |
| $10,000 | $13,489 | $18,194 | $49,272 | $109,357 | $242,730 |
| $25,000 | $33,722 | $45,484 | $123,180 | $273,393 | $606,824 |
| $50,000 | $67,443 | $90,968 | $246,360 | $546,786 | $1,213,648 |
| $100,000 | $134,885 | $181,937 | $492,720 | $1,093,572 | $2,427,295 |
Add a $500/month contribution to a $10K start at 8% for 30 years and you reach ~$854,000 instead of $109K — contributions matter more than the starting amount over long horizons.
The basics
What is compound interest?
Compound interest is interest earned on top of interest already earned. Each compounding period, the interest gets added to your balance, so the next period's interest is calculated on a slightly larger amount. Over enough time, the effect is dramatic — Einstein reportedly called it the eighth wonder of the world. He had a point.
The math
The formula
Without regular contributions
A = P × (1 + r/n)^(n × t)
Where A is the final amount, P is the principal, r is the annual interest rate (as a decimal — 0.08 for 8%), n is the number of compounding periods per year (12 for monthly, 365 for daily), and t is the number of years.
With regular contributions
When you add a fixed amount each period, the formula becomes messier (it's the future value of an annuity plus the compounded principal):
A = P × (1 + r/n)^(n × t) + PMT × ((1 + r/n)^(n × t) − 1) / (r/n)
Our calculator handles this exactly, period by period.
A common misconception
Why compounding frequency matters less than you think
On a $10,000 deposit at 5% for 10 years:
- Yearly compounding: $16,288.95
- Monthly compounding: $16,470.09 (+$181)
- Daily compounding: $16,486.65 (+$197)
- Continuous compounding: $16,487.21 (+$197)
The jump from yearly to monthly adds ~1%. Monthly to daily adds another 0.1%. After that, you're chasing pennies. Compounding frequency is far less important than rate, contributions, and time horizon.
Mental math shortcut
The rule of 72
To estimate years to double your money, divide 72 by the interest rate (as a percentage, not a decimal):
- At 4%: 72 / 4 = 18 years to double
- At 6%: 72 / 6 = 12 years to double
- At 8%: 72 / 8 = 9 years to double
- At 10%: 72 / 10 = 7.2 years to double
- At 12%: 72 / 12 = 6 years to double
The rule is approximate but accurate within a few percent for rates in the 5-15% range. It works because of how continuous compounding rounds off.
What to plug in
Realistic interest rates by investment type
High-yield savings (HYSA)
4-5% in 2026. FDIC insured up to $250K per bank. Best for emergency funds and short-term goals.
Certificates of deposit (CDs)
4-5% in 2026, locked for 6 months to 5 years. Slightly higher than HYSA but penalized for early withdrawal.
US Treasury bonds
4-5% in 2026 for 10-year notes. Government-backed, virtually risk-free.
Corporate bonds
5-7% for investment grade, 8-10% for high-yield. Higher rate, higher default risk.
S&P 500 index funds
Historical average ~10% nominal, ~7% real (after inflation). Volatile in any given year, smooth over decades.
Real estate (rental)
6-10% total return historically. More work and less liquid than market investments.
Why time matters more than money
The cost of waiting
Compound interest rewards starting early. Two examples:
Saver A: Invests $500/month from age 25 to 35 ($60,000 total contributions), then nothing. At 8% by age 65: ~$715,000.
Saver B: Invests $500/month from age 35 to 65 ($180,000 total contributions — 3x what Saver A put in). At 8% by age 65: ~$679,000.
Saver A invested less and ended up with more. The extra 10 years of compounding mattered more than the extra 20 years of contributing. Start as early as you can, even if the amount is small.
Behind the scenes
Privacy and how it runs
Everything runs in your browser
Common questions
How is compound interest different from simple interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest. Over 30 years at 8%, $10,000 grows to $34,000 with simple interest but $100,000+ with compound interest (monthly compounding).
Should I account for inflation?
The calculator shows nominal (raw dollar) growth. To estimate real purchasing power, subtract about 2-3% from your assumed rate — that's the long-run US inflation average. A "real return" of 5% is closer to actual buying power growth than a "nominal return" of 8%.
What's the difference between APR and APY?
APR is the annual rate without compounding. APY is the effective annual rate after compounding. A 5% APR compounded monthly is 5.12% APY. Savings accounts advertise APY; loans advertise APR.
Can I lose money to inflation?
Yes. If your nominal return is below inflation, your real purchasing power decreases. A savings account at 0.5% in a 3% inflation environment loses 2.5%/year in real terms. This is why long-term savings usually move out of cash into bonds, stocks, or other higher-return assets.
What is the future value formula?
FV = PV × (1 + r)^n for a lump sum, where PV is present value, r is the periodic rate, and n is the number of periods. Our calculator uses the more general form that also accounts for regular contributions.
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Last reviewed: · Methodology based on US building code standards, contractor pricing surveys, and manufacturer specifications.