Compound Interest Calculator

A = P(1 + r/n)^(nt) for the starting amount, where r is the annual rate, n the compounding periods per year and t the years. Regular contributions are added with the future value of a series: PMT x ((1 + i)^m - 1) / i, at the equivalent monthly rate i over m months.

What is compound interest?

Interest paid on interest already earned. In year one it is barely visible. Over twenty years it is usually larger than everything you contributed, which is the entire argument for starting early.

How much does the compounding frequency matter?

Far less than people expect. At 7 percent, daily rather than yearly compounding adds about a quarter of a percent a year. The rate and the time matter enormously; the frequency is a rounding detail.

What return should I assume?

A savings account is whatever it pays today. For a long-term stock market estimate, 7 percent is the common figure, being roughly the historical average after inflation. It is an average, not a promise, and no single year looks like it.