How compound growth works
Each month the balance earns interest, and next month that interest earns interest too. Early on almost all of the growth is your own deposits. Given enough years, the interest line bends upward and can overtake what you put in. That bend is what people mean by compound interest.
| Year | You put in | Interest | Balance |
|---|---|---|---|
| 1 | $8,600 | $409 | $9,009 |
| 5 | $23,000 | $4,675 | $27,675 |
| 10 | $41,000 | $17,261 | $58,261 |
| 20 | $77,000 | $78,163 | $155,163 |
The rule of 72
To estimate how long money takes to double, divide 72 by the yearly rate: at 4% about 18 years, at 6% about 12, at 8% about 9. It is a shortcut; the exact answers are 17.7, 11.9 and 9.0 years. The calculator shows both for the rate you enter.
Assumptions you should know
- A steady rate every year. Real investment returns go up and down, and can be negative.
- Monthly compounding, deposits at the end of each month.
- No taxes, fees or inflation. $100,000 in 20 years will buy less than $100,000 today.
It is math under your assumptions, not a forecast and not financial advice. Compare with Investor.gov's calculator if you want a second opinion on the arithmetic.
What people ask next
- How much should I save each month? to hit a specific number by a specific date.
How we calculate
Balance after n months = P × (1 + r)ⁿ + monthly × ((1 + r)ⁿ − 1) ÷ r, with r = yearly rate ÷ 12. Interest = balance − everything you put in.
- Monthly compounding, deposits at the end of each month.
- A constant rate. Real returns vary year to year and can be negative.
- No taxes, fees or inflation.
Sources: Investor.gov (SEC) — Compound interest calculator and glossary.
Every formula is checked by automated tests. Methodology · Updated