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Calculate compound interest on investments and savings. See how your money grows over time with regular contributions, multiple compounding frequencies, and inflation adjustments.
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is only calculated on the principal, compound interest allows your money to grow exponentially over time. This is why Albert Einstein allegedly called it the "eighth wonder of the world."
A = P(1 + r/n)^(nt)Time is your greatest ally with compound interest. Starting 10 years earlier can more than double your final balance, even with smaller contributions.
Monthly contributions compound faster than annual lump sums. Even small regular investments can grow significantly over time.
Daily compounding earns slightly more than monthly, which earns more than annually. Look for accounts with more frequent compounding.
Your real returns are your nominal returns minus inflation. Aim for investments that beat inflation to grow your purchasing power.
Calculate how much you need to save monthly to reach your retirement goal, factoring in employer matches and tax-advantaged accounts.
Build a safety net in a high-yield savings account. See how quickly you can accumulate 3-6 months of expenses.
Plan for education expenses using a 529 plan or other investment vehicle to take advantage of compound growth.
Save for a home purchase by investing in low-risk options while maintaining liquidity.
| Industry | Benchmark | Description |
|---|---|---|
| High-Yield Savings | 4-5% | FDIC insured, highly liquid |
| Certificates of Deposit | 4-5.5% | Fixed rate, early withdrawal penalties |
| Bond Funds | 3-5% | Moderate risk, income focused |
| S&P 500 Index | 10-12% | Historical average, high volatility |
| Total Stock Market | 8-10% | Diversified equity exposure |
| Money Market | 4-5% | Low risk, check-writing privileges |