Compound interest means the interest you earn starts earning interest of its own. Enter a starting amount, an annual rate and a time horizon to see the final balance, total interest earned and a year-by-year growth chart.
The compounding frequency controls how often interest is credited. Monthly compounding at the same nominal rate yields slightly more than annual compounding because each credit starts compounding sooner — the difference is shown as the effective annual rate in the results.
The projection assumes a constant rate and no deposits or withdrawals. For a plan with recurring monthly contributions, use the DCA calculator; for a savings target, the Savings Goal tool works backwards from the amount you need.
The rate assumption does more work than the horizon does, and it deserves more scepticism than it usually gets. A projection at 10% and one at 6% differ by roughly a factor of two over thirty years on the same contributions, which is the whole difference between comfortable and short. Long-run equity returns have been nearer 6–7% after inflation than the nominal double digits people remember, and using a nominal rate against expenses that inflate is the single most common way these projections end up overstating what the balance will buy.
Frequently asked questions
What is compound interest?
Interest calculated on both the original principal and the interest already accumulated. Over long periods it grows a balance far faster than simple interest, which only pays on the principal.
How often should interest compound?
More frequent compounding earns slightly more at the same nominal rate. The gap between monthly and daily compounding is small; the gap between annual and monthly is more noticeable over decades.
What rate should I assume?
Use the rate your account or investment actually pays. For long-run stock-market projections, many planners use 5–8% nominal, but past returns never guarantee future ones.