Plain Finance

Compound Interest Calculator

Project what regular investing turns into — and see the two things most compound-interest calculators leave out: how much of the total is growth rather than your own money, and what the figure is worth once inflation is taken off it.

What you invest

How it grows

Before inflation. A broad stock index has averaged roughly 7% after inflation historically — enter a nominal figure here.

Used only to show the result in today's money. Set to 0 to hide it.

You would end up with

$691,150

after 30 years

worth $329,501 in today's money

You paid in
$190,000.00
Growth added
$501,150.47
Growth’s share
73%
Effective rate
7.23%

What inflation takes

$361,650

is what inflation quietly removes at 2.5% a year. The projection is right; it is just denominated in future dollars, which buy less.

Your money vs the growth

Growth overtakes everything you have paid in at month 200 — 16 years, 8 months in. From then on the account is mostly not your money.

  • What you paid in
  • Total balance

The cost of starting later

Waiting five years before beginning, and still stopping on the same date, would leave you with $228,860 less. Time is the one input you cannot make up for afterwards.

Compounding is boring and then it is not

The mechanism is simple enough to state in a sentence: your returns start earning returns. A $10,000 balance at 7% earns $700 in the first year, then earns 7% on $10,700 in the second. The extra $49 is the whole of compound interest.

What makes it hard to feel is the shape. For years, almost nothing happens that you could not have achieved by saving in a jar. The balance is mostly your own deposits, and the growth is a rounding error beside them. Then the curve pulls away from the straight line, slowly at first, and eventually the growth is doing more work each year than you are.

The chart above is that story. The dashed line is money you paid in; it rises in a straight line because you contribute the same amount every month. The solid line is the balance. The space between them is everything the returns produced.

The crossover: when it stops being your money

On the example loaded above — $10,000 to start, $500 a month, 7% for thirty years — you pay in $190,000 and finish with roughly $691,000. About 73% of the end result is growth.

But look at when that happens. Growth does not overtake your total contributions until month 200 — more than sixteen years in. For over half the run, the account is mostly just your savings with a bonus attached. Everyone who quits early quits during that half, which is precisely why they never see the other one.

The number nobody puts on the poster

$691,000 is a real projection. It is also denominated in dollars from thirty years' time, and those buy considerably less than today's.

At 2.5% inflation, the same $691,000 has the purchasing power of about $330,000 today. Inflation quietly removes $362,000 — more than half the headline. Nothing here is wrong: the projection is correct in future dollars. But a calculator that shows you only the large number is telling you something true in a way that leaves a false impression, which is why the adjusted figure sits directly beneath it on this page.

One trap worth avoiding: decide whether your return figure already has inflation removed. Historic US stock returns are often quoted at about 10% nominal or about 7% real. If you enter 7% intending it as a real return, set the inflation field to 0, or you will deduct inflation twice and badly understate the result.

What actually moves the result

In order of how much they matter:

  1. Time. Waiting five years to start, on the example above, costs about $229,000. Ten years costs around $390,000. The early contributions are the ones that compound longest, so they do disproportionate work — and it is the only input you cannot make up for later.
  2. How much you contribute. Directly and predictably proportional, and the input you have most control over.
  3. The rate of return. Enormous over decades, but far less under your control than the internet suggests, and chasing it reliably costs more than it earns.
  4. Compounding frequency. Almost irrelevant. Annual to daily compounding is worth about 5% over thirty years on the default example. Useful for comparing accounts that quote different terms; not worth optimising.

What this calculator does not model

A steady return, which is the biggest simplification here. Real markets deliver an average made of very good and very bad years, and the order matters — a severe drop early in the run does more damage than the same drop late, because it hits a balance that then has to recover before compounding resumes. It also excludes taxes on gains, platform and fund fees (which compound against you exactly as returns compound for you), and any change in your contribution over time, which for most people rises with income.

Treat the output as the shape of an outcome rather than a forecast of one. If you are weighing investing against clearing a debt first, the debt payoff calculator gives you the other half of that comparison, and paying down a mortgage is a guaranteed return worth measuring against an uncertain one.

Frequently asked questions

How does compound interest actually work?

Your returns start earning returns of their own. In year one a $10,000 balance at 7% earns $700. In year two the 7% applies to $10,700, so it earns $749 — and the extra $49 is the compounding. That sounds trivial, and for years it is. The effect is invisible early and overwhelming late, which is why the chart on this page is far more useful than the headline number: it shows the gap between what you paid in and what you have widening slowly and then suddenly.

How much of my final balance will be growth rather than my own money?

More than you would guess, given enough time. On the example above — $10,000 to start, $500 a month, 7% for 30 years — you pay in $190,000 and end with about $691,000. Roughly 73% of the final balance is growth. But it takes a long time to get there: growth does not overtake your total contributions until around month 200, more than sixteen years in. For the first half of the run, the account is mostly just your own savings.

Why is the inflation-adjusted figure so much lower?

Because a dollar in thirty years buys less than a dollar today. At 2.5% inflation, prices roughly double over three decades, so the $691,000 projection is worth about $330,000 in today’s purchasing power. Neither number is wrong — the projection is correct in future dollars — but quoting only the large one overstates what you would actually be able to buy. This is the single most common way compound-interest calculators mislead, and it is why the adjusted figure sits directly under the headline here.

What return rate should I use?

Be conservative, and be clear about whether your figure includes inflation. A broad US stock index has historically returned roughly 10% a year nominally, or about 7% after inflation, but that average hides decades that were much worse and sequences that mattered enormously. If you enter a nominal rate like 7–10%, use the inflation field to see the real result. If you enter a real rate that already has inflation removed, set inflation to 0 so you are not deducting it twice. Whatever you pick, treat the output as one scenario rather than a forecast.

Does compounding frequency make much difference?

Far less than people expect. On the default example, switching from annual to daily compounding takes the result from about $661,000 to about $694,000 — a 5% improvement over thirty years. That is not nothing, but it is dwarfed by the rate, the amount you contribute, and above all the time. Frequency is worth understanding so you can compare accounts quoting different terms, and worth almost nothing as a thing to optimise.

What does starting five years later cost me?

On the default example, about $229,000 — and waiting ten years costs roughly $390,000. That is the entire argument for starting with a small amount now rather than a serious amount later. The money contributed in the first few years is the money that compounds for longest, so those contributions do disproportionate work. Time is the only input in this calculator that you genuinely cannot make up for afterwards.

Is this the same as a savings account?

The maths is identical; the realism is not. A savings account pays a rate the bank sets and can change at any time, and it does not go down. An investment return of 7% is a long-run average made of good years and severely bad ones, and the order they arrive in matters — a crash early in the run does more damage than the same crash late. Use this to understand the shape of long-term growth, not to predict a balance on a particular date.