Compound interest is often called "interest on interest." Unlike simple interest, which only earns money on your principal, compound interest earns returns on both your initial investment and the accumulated interest over time. Over long periods, compounding can dramatically grow your wealth.

The Power of Starting Early

One of the most important factors in compound interest is time. The earlier you start investing, the more time your money has to grow. Even small monthly contributions can grow into substantial sums over decades thanks to compounding.

How to Use This Calculator

Enter your initial investment amount, how much you plan to contribute each month, your expected annual rate of return, and how many years you plan to invest. The calculator will show you the future value of your investment, broken down into total contributions versus interest earned.

Tips for Maximizing Compound Growth

Start as early as possible — Time is your biggest advantage.
Contribute regularly — Consistent monthly contributions amplify results.
Reinvest dividends — Let your earnings compound instead of taking them out.
Keep fees low — High investment fees eat into your compound returns over time.

Frequently Asked Questions

What is a good annual return rate? Historically, the U.S. stock market has returned about 7-10% annually after inflation. Your actual returns will vary based on your investment choices.

How much should I save each month? Financial advisors often recommend saving 15-20% of your income for retirement. Even starting with a small amount is better than nothing.