About this calculator
Compound interest is interest earned on interest. Money that grows at r% per year, compounded, follows the formula FV = PV × (1 + r)t. The reason compounding is called the most powerful force in finance is that the curve isn't linear — it accelerates. A 7% annual return doubles your money in roughly 10 years and quadruples it in 20.
The two levers: time and rate
A 25-year-old who invests $5,000 once at 8% has $108,623 at 65 — without ever adding another dollar. A 35-year-old who does the same has only $50,313, because they lost 10 years of compounding. Time is the more important variable than the contribution amount for long horizons.
Compounding frequency
Daily compounding beats annual compounding, but the difference at any realistic rate is tiny. 7% APR compounded daily produces 7.25% effective annual yield; compounded monthly, 7.23%; compounded annually, exactly 7%. For most planning purposes, monthly compounding is the right baseline.
Real vs nominal returns
The calculator returns nominal future value (in today's dollars adjusted for the entered rate). To get real (inflation-adjusted) value, subtract expected inflation from the rate. The S&P 500 averaged ~10% nominal and ~7% real over the last century. Plan with the real number — it's what your future self can actually buy with.