Compound Interest Calculator

Compound interest is what happens when your interest earns interest. You put $1,000 in an account at 5%. After year one, you have $1,050. In year two, you don't just earn 5% on the original $1,000 – you earn 5% on the full $1,050. That extra $50 starts working for you.

Over short periods, the difference between simple and compound interest is negligible. Over decades, it's everything. $10,000 at 7% for 30 years becomes $31,000 with simple interest. With compound interest? $76,123. That's not a typo. The extra $45,000 comes from interest stacking on interest, year after year.

Time is the secret ingredient. A 25-year-old who invests $5,000/year for just 10 years ($50,000 total) and then stops will have more at 65 than someone who starts at 35 and invests $5,000/year for 30 years ($150,000 total). The early starter's money had 10 extra years to compound. That's the power you're harnessing.

Want to know how long it takes to double your money at a given interest rate? Divide 72 by the rate. At 6%, your money doubles in 12 years (72 ÷ 6 = 12). At 8%, it doubles in 9 years. At 10%, just over 7 years.

The Rule of 72 isn't exact, but it's close enough for quick estimates. It works because of how compound interest math works out. The actual formula is ln(2) / ln(1 + r), which is harder to calculate in your head.