Compound Interest Calculator
See how your investments grow with compound interest. Interactive charts, scenario comparison, retirement planner, FIRE calculator, and financial insights — all in your browser.
Investment Details
- 💰 Compound interest earned you $213.8K — that's 164% more than your total contributions of $130.0K.
- ⏰ Rule of 72: At 8% annual return, your money doubles every 9.0 years.
- 📈 Your initial $10.0K investment grew 34.4× to $343.8K.
- 🚀 Starting 10 years earlier adds $230.1K — the #1 wealth-building lever is time.
- 🎯 62% of your final $343.8K came from compound growth, not your contributions.
What Is Compound Interest?
Compound interest is interest calculated on both the initial principal and all accumulated interest from previous periods. Unlike simple interest — which only grows proportionally to the principal — compound interest grows exponentially. This is why Albert Einstein reportedly called it "the eighth wonder of the world."
The longer you invest, the more dramatic the effect. In the early years, compound interest adds modest amounts. But after 20–30 years, interest earned on interest can dwarf your actual contributions — often accounting for 60–80% of your final portfolio.
Compound Interest Formula
This calculator simulates month-by-month compounding for maximum accuracy, regardless of the compounding frequency selected. The effective annual rate (EAR) accounts for intra-year compounding and is always slightly higher than the stated annual rate.
How Compounding Frequency Affects Growth
The more frequently interest compounds, the faster your money grows. Here's how a $10,000 investment at 8% annual return grows differently over 30 years by compounding frequency:
Daily: $109,357 (EAR: 8.328%)
Monthly: $109,357 — practically identical to daily
Quarterly: $107,652 (EAR: 8.243%)
Annually: $100,627 (EAR: exactly 8%)
Most index funds and savings accounts compound monthly. For high-yield savings accounts, daily compounding can add meaningful extra return over time.
The FIRE Movement — Financial Independence, Retire Early
FIRE stands for Financial Independence, Retire Early. The goal is to accumulate enough invested assets that the annual returns from your portfolio cover your living expenses — allowing you to stop working, or work only on projects you choose.
The most common framework is the 4% rule: if you withdraw 4% of your portfolio per year, your portfolio will sustain itself indefinitely based on historical market returns. This means your FIRE number = 25× your annual expenses.
Lean FIRE targets a frugal lifestyle, using a 5% withdrawal rate (20× expenses).
Fat FIRE targets a more comfortable lifestyle, using a 3% withdrawal rate (33× expenses).
Coast FIRE is the amount you need today so future growth alone covers your FIRE number.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only calculates interest on the principal), compound interest grows exponentially — earning "interest on interest." Albert Einstein reportedly called it the eighth wonder of the world.
What is the compound interest formula?
The compound interest formula is: A = P × (1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the number of times interest compounds per year, and t is the time in years. For regular contributions (like monthly investments), the formula becomes: A = P × (1+r/n)^(nt) + PMT × ((1+r/n)^(nt) - 1) / (r/n).
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut to estimate how long it takes an investment to double. Divide 72 by the annual interest rate: 72 ÷ rate = years to double. For example, at 8% annual return, your investment doubles every 9 years (72 ÷ 8 = 9). At 6%, it doubles every 12 years.
What is the FIRE number?
The FIRE (Financial Independence, Retire Early) number is the portfolio size needed to retire and live off investment returns indefinitely. It is calculated using the 4% safe withdrawal rule: FIRE Number = Annual Expenses × 25. For example, if you spend $50,000/year, your FIRE number is $1,250,000. Lean FIRE uses 5% withdrawal (20× expenses) and Fat FIRE uses 3% withdrawal (33× expenses).
How does compounding frequency affect returns?
More frequent compounding leads to higher returns. An 8% annual rate compounded daily produces an effective annual rate of 8.328%, while monthly compounding produces 8.300%, quarterly 8.243%, and annual compounding exactly 8%. The difference between daily and annual compounding on a $10,000 investment over 20 years is approximately $1,000.
What is Coast FIRE?
Coast FIRE is the amount you need invested today so that, without any additional contributions, your portfolio grows to your full FIRE number by your target retirement age. Once you hit your Coast FIRE number, you no longer need to invest for retirement — you just need to cover your current expenses. Formula: Coast FIRE = FIRE Number ÷ (1 + r)^years_to_retirement.
Why does starting early matter so much?
Starting early maximizes the time for compound interest to work. A 25-year-old investing $500/month at 8% for 40 years accumulates approximately $1.75M. A 35-year-old investing the same amount for 30 years accumulates only about $745K — less than half, despite investing for just 10 fewer years. The first decade of growth is extremely powerful because it sets the base for exponential growth.
Is this compound interest calculator free?
Yes, completely free. No signup, no account, no premium tier required. All features including scenario comparison, retirement planner, FIRE calculator, and CSV export are available to everyone. All calculations happen in your browser — no data is sent to any server.