How compound interest works
With compound interest, the interest you earn is added to your balance, and the next interest is calculated on that bigger balance. The classic formula for a single deposit is A = P × (1 + r/k)k × t, where P is the deposit, r the yearly rate, k the number of times interest compounds per year and t the number of years.
Example: $10,000 at 5% for 10 years grows to $16,288.95 compounded yearly, or $16,470.09 compounded monthly.
Regular deposits
This calculator adds your monthly deposit at the end of each month. Deposits matter more than they seem: $200 a month at 6% for 30 years comes to $200,903, of which only $72,000 was deposited.
The rule of 72
Divide 72 by the yearly rate to estimate how many years it takes money to double: at 6%, about 12 years.
Results are projections based on a constant rate. Real investments rise and fall, and savings rates change. This is not financial advice.
Quick examples
- $1,000 at 5% for 10 years
- $1,000 at 7% for 20 years
- $5,000 at 5% for 10 years
- $5,000 at 7% for 20 years
- $10,000 at 5% for 10 years
- $10,000 at 7% for 20 years
- $25,000 at 5% for 10 years
- $25,000 at 7% for 20 years
- $50,000 at 5% for 10 years
- $50,000 at 7% for 20 years
- $100,000 at 5% for 10 years
- $100,000 at 7% for 20 years