Compound Interest Calculator

How Compound Interest Works

Compound interest is interest earned on both your original investment and on interest you've already earned. It's the reason Albert Einstein (allegedly) called it the "eighth wonder of the world."

The magic of compounding is that it accelerates over time. In the early years, most of your balance comes from your contributions. But as your portfolio grows, the growth on your growth starts to dominate. That's the inflection point — when your money is working harder than you are.

The Rule of 72

A quick way to estimate how long it takes to double your money: divide 72 by your annual return rate. At 7% returns, your money doubles roughly every 10.3 years. At 10%, every 7.2 years. This simple rule shows why even small differences in return rate — or starting a few years earlier — make an enormous difference over decades.

Why Consistency Matters More Than Amount

Research shows that the habit of investing consistently matters more than the amount, especially early on. Someone who invests $200/month for 30 years will likely outperform someone who waits 10 years and then invests $400/month for 20 years — even though the second person contributed more total dollars.