Albert Einstein reputedly called compound interest the eighth wonder of the world. Whether or not he did, the maths is remarkable: money left to compound grows exponentially, not linearly. This calculator shows exactly how your savings can build over the years.
Why compounding is so powerful
With simple interest you'd earn the same amount every year. With compound interest, each year's gains join the balance and earn returns of their own. Over a few years the difference is modest; over decades it's enormous, because the growth curve steepens as the balance rises.
The formula
For a single deposit, the future value is A = P(1 + r/n)^(n·t), where P is the principal, r the annual rate, n the number of compounding periods per year, and t the number of years. Adding regular contributions compounds each deposit over its remaining time in the account.
Time beats timing
Because compounding rewards duration, starting early is the single most effective thing you can do. An investor who begins at 25 can end up ahead of one who starts at 35 and contributes far more — the earlier money simply has more time to multiply.
Don't forget inflation and fees
The balance this calculator shows is nominal. Inflation erodes purchasing power over time, and account fees and taxes reduce real returns. When planning, it's wise to think in inflation-adjusted terms and keep costs low.
Frequently asked questions
It's interest calculated on both your original principal and the interest you've already earned. Because each period's gain is added to the balance, growth accelerates over time.
For a lump sum: A = P(1 + r/n)^(nt). With regular contributions, each deposit also compounds for the remaining time. This calculator computes it month by month, including your monthly contributions.
More frequent compounding yields slightly more. This calculator compounds monthly, which matches most savings and investment accounts and is a reasonable default.
It depends on where your money sits. Savings accounts pay a few percent; a diversified stock-market portfolio has historically averaged roughly 7% real over the long run — but past performance doesn't guarantee future results.