Compound Interest Calculator
Visualize how your money can grow exponentially over time.
Total Future Value
The Eighth Wonder of the World
Albert Einstein famously called compound interest the "eighth wonder of the world." He said, "He who understands it, earns it... he who doesn't, pays it."
Understanding Compound vs Simple
Unlike simple interest which calculates only on the principal, compound interest creates a snowball effect. Our tool accounts for:
- Principal Growth: The money you contribute directly.
- Accumulated Interest: The money your interest earns over time.
- Frequency: Calculating growth on a monthly basis for precision.
The Rule of 72
Want to know how fast your money will double? Divide 72 by your interest rate.
- 6% Return: Doubles in 12 years.
- 8% Return: Doubles in 9 years.
- 10% Return: Doubles in 7.2 years.
Frequently Asked Questions
What is the formula?
We use the standard formula A = P(1 + r/n)^(nt) plus the future value of a series formula for monthly contributions.
Does this include inflation?
No, this calculator shows nominal value. To estimate real purchasing power, you should subtract the expected inflation rate (e.g., 3%) from your investment return rate manually.
What is a good interest rate?
Historically, the S&P 500 has returned about 10% annually before inflation. High-yield savings accounts typically offer around 4-5% with lower risk.
Why is the line curved?
That curve is the power of compounding! As your interest starts earning its own interest, your total value grows faster and faster each year, creating an exponential curve upwards.
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