How is compound interest calculated here?

Interest compounds monthly. Future value = P*(1+r/12)^(12n) + C * [((1+r/12)^(12n) - 1) / (r/12)], where P is principal, C is monthly contribution, r is annual rate, and n is years.

Does it account for taxes or inflation?

No. This shows nominal returns. Subtract your expected tax rate and inflation rate from the annual return for a real-value projection.

What is a realistic annual return?

Historically, the S&P 500 has returned around 10% annually before inflation (about 7% real). High-yield savings is typically 3-5%.

Why is starting early more powerful than contributing more?

Compound interest rewards time exponentially. $200/month for 40 years at 7% beats $400/month for 20 years at 7% by more than $200,000 — the early dollars compound through the most growth cycles.

When should I model real returns instead of nominal?

For long retirement projections (10+ years), subtract ~3% from your assumed return to approximate inflation. Otherwise the future-value number is impressive but represents less purchasing power than today's dollars suggest.

Compound Interest Calculator

Finance· 37 tools

Free online compound interest calculator. See how your investment grows over time with monthly contributions. Enter starting balance, monthly deposit, annual return, and time horizon to see future value, total contributions, and interest earned.

Starting Balance ($)

Monthly Contribution ($)

Annual Return

Years

$300,851

Future Value

$315k$235k$155k$75k$-4543

Y0Y10Y20

Contributions

Balance

$130,000

Total Contributions

$170,851

Interest Earned

Disclaimer: For informational purposes only. This is not financial, tax, or legal advice — consult a licensed professional before making decisions.

Frequently Asked Questions

References

Compound Interest Calculator — investor education — U.S. Securities and Exchange Commission (SEC)

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Frequently Asked Questions

References and sources

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