Compound Interest Estimator
Project long-term savings growth. See how regular monthly deposits combined with compounding interest expand your wealth over time.
Annual Growth Breakdown
Year-by-year trajectory of your principal deposits vs accumulated compound interest:
| Year | Total Deposits | Interest Earned | Total Interest | End Balance |
|---|
The Power of Compound Interest
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Often called "interest on interest", compounding accelerates asset growth exponentially over long horizons.
Compounding Formula
The standard compounding formula is: A = P (1 + r/n)^(nt) + PMT × [ ((1 + r/n)^(nt) - 1) / (r/n) ], where P is initial deposit, r is annual rate, n is compounding frequency, t is number of years, and PMT is monthly contribution.
Frequently Asked Questions
What is a realistic annual rate of return?
Historically, broad market stock index funds (like the S&P 500) have yielded an average annual return of roughly 7% to 10% before inflation.
How does compounding frequency impact returns?
The more frequently interest compounds (e.g. monthly vs annually), the slightly higher your effective annual yield.
⚠️ Financial Disclaimer & Last Updated (2026)
This calculator is provided for estimation and educational purposes only and does not constitute formal financial, investment, tax, or legal advice. Interest rates, tax bracket thresholds, and market returns fluctuate over time. Historical benchmarks (such as the S&P 500 long-term historical average of ~10% nominal / ~7% real return after inflation, source: S&P Dow Jones Indices / Investopedia) are for illustrative comparisons only. Always consult a licensed Certified Financial Planner (CFP) or CPA for personal financial decisions.