Compound Interest Calculator
Calculate compound interest with monthly contributions. See how your investment grows over time with a detailed year-by-year breakdown.
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CalcLeap Editorial Team
Reviewed by certified professionals · Last updated April 1, 2026
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📐 How We Calculate This
We use the compound interest formula: A = P(1 + r/n)^(nt), where P is principal, r is the annual rate, n is compounding frequency, and t is time in years. For retirement projections, we factor in inflation-adjusted returns using historical S&P 500 data from NYU Stern.
Past performance does not guarantee future results. Actual investment returns vary based on market conditions, fees, and asset allocation. Consult a licensed financial advisor for personalized planning.
📚 Sources & References
Frequently Asked Questions
What is compound interest?▼
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the principal), compound interest creates a snowball effect where your money grows exponentially over time. Albert Einstein reportedly called it "the eighth wonder of the world."
How does compound frequency affect my returns?▼
More frequent compounding leads to slightly higher returns. Daily compounding earns more than monthly, which earns more than quarterly, which earns more than annual. However, the difference is usually small — the biggest factors are your interest rate, time horizon, and contribution amount.
What's the Rule of 72?▼
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate — for example, at 7% interest, your money doubles in approximately 72 ÷ 7 ≈ 10.3 years. This rule works well for rates between 2-15%.
Why are regular contributions so powerful?▼
Regular contributions dramatically accelerate wealth building through dollar-cost averaging and compounding. For example, $500/month invested at 7% for 20 years turns into about $260,000 — but only $120,000 of that is your contributions. The rest is compound interest working in your favor.
Does this calculator account for taxes and inflation?▼
This calculator shows nominal (pre-tax, pre-inflation) returns. For a more realistic picture, you can reduce the interest rate by your expected inflation rate (typically 2-3%) and consider that investment gains may be taxed. Tax-advantaged accounts like 401(k)s and Roth IRAs can help reduce the tax impact.