What compound interest really means
Compound interest is interest earning interest. Instead of only your original deposit earning a return, the returns themselves start earning too — so your balance grows faster and faster over time. This calculator shows exactly how that snowball builds from your starting amount, your monthly contributions, your rate of return, and how often interest compounds.
The longer your money stays invested, the more dramatic the effect. That's why starting early usually beats contributing more later.
A quick example
Put in $10,000, add $300 a month, and earn 7% a year for 20 years: you'd contribute $82,000 of your own money but end up with roughly $196,000 — about $114,000 of pure growth. Try changing the years above and watch how the interest portion explodes in the final decade.
How to use it well
- Be realistic with the rate. A diversified stock-market portfolio has historically averaged around 7% after inflation — cash savings far less.
- Automate contributions. Regular monthly investing smooths out market ups and downs and keeps the compounding engine fed.
- Give it time. Compounding rewards patience — the biggest gains come in the later years.