See exactly how your savings or investments grow over time. Enter your principal, rate, and monthly contributions to get an instant year-by-year visual breakdown. Free, no signup, no limits.
Compound interest is the process where interest is added to your principal, and that combined total then earns interest in subsequent periods. Unlike simple interest — which only applies to your original deposit — compound interest grows exponentially because you're always earning returns on a larger base.
Often called "the eighth wonder of the world," compounding is the core engine behind every retirement fund, savings account, and long-term investment portfolio. The longer you let it run, the more dramatic the results become.
Set monthly contribution to $0 first, then increase it. You'll see that consistent contributions often matter more than the interest rate itself.
Invests $5,000 + $300/month at 8% for 40 years.
Result: $1,074,281 — Interest earned: $925,281
Same $5,000 + $300/month at 8% for 20 years.
Result: $191,473 — Interest earned: $114,473
Sarah earns over $810,000 more in interest without investing a single extra dollar — purely from starting 20 years earlier. Time is the most valuable variable.
Time is the single most powerful lever in compounding. A 25-year-old investing modestly will almost always out-earn a 45-year-old investing aggressively, due to the extra years of exponential growth.
Every withdrawal permanently reduces your compounding base. Build a separate emergency fund so you never need to touch your investment account.
Enable automatic dividend reinvestment in your brokerage account. Every dividend reinvested becomes part of your compounding base and earns its own future returns.
Commit to increasing your monthly contribution by even $25–$50 every time your income increases. The compounding effect on each incremental dollar over decades is staggering.
A 1% annual fee sounds small but can eliminate 20–25% of your total portfolio value over 30 years. Choose index funds with expense ratios under 0.20% whenever possible.
How much does frequency actually matter on a $10,000 investment at 8% over 20 years?
The biggest gain comes from moving from annual to monthly compounding. Beyond monthly, improvements are minimal. Focus on finding higher rates and contributing more — those have far greater impact.
Divide 72 by your annual interest rate to estimate how many years it takes your money to double:
This rule also works in reverse: at 4% inflation, the purchasing power of $1 halves in 18 years. Keeping money in a low-yield account is a guaranteed slow loss of real wealth.