Compound Interest Calculator
See how time and compounding frequency transform any investment. Einstein's eighth wonder, calculated.
Your Numbers
Contributions vs. Interest Earned
Growth Milestones
| Year | Balance | Contributions | Interest Earned |
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Find a Fee-Only Financial Advisor āHow Compound Interest Works
Compound interest means you earn returns not just on your original principal, but on all the interest and gains you've accumulated. The longer the time horizon, the more dramatic the effect, in the final years of a 30-year investment, you can earn more in a single year than your entire starting principal.
Compounding frequency matters too. Daily compounding produces slightly more than monthly, which produces more than annual, because more frequent compounding means interest starts earning interest sooner. For most long-term investments, the difference between monthly and daily compounding is small, but the difference between investing early and investing late is enormous.
The real enemy of compounding is inflation, which is why this calculator includes an inflation adjustment. A $1M balance in 30 years is worth roughly $412,000 in today's purchasing power at 3% annual inflation. A financial advisor can help you structure investments that stay ahead of inflation over your specific time horizon.