Compound Interest Calculator

For long-term stock market investing, 7% is a reasonable inflation-adjusted (real) return to assume, based on historical averages. That figure comes from the long-run nominal return of about 10% on a broad index like the S&P 500, minus roughly 3% for inflation. If you prefer to work in nominal terms and account for inflation separately, use 10% instead. Bonds have historically returned less, around 3-5%, and high-yield savings accounts have recently paid in a similar 4-5% range, though those rates move with the economy. Whatever you choose, lean toward conservative estimates: it is better to be pleasantly surprised than to fall short of a goal you were counting on.

Less than most people expect—it is meaningful but not dramatic. Consider a $10,000 lump sum at a 7% annual rate left for 30 years. With annual compounding it grows to about $76,123; with monthly compounding to about $81,165, roughly 7% more; and with daily compounding to about $81,645, only a little above monthly. The reason is diminishing returns: once interest is added frequently, compounding more often adds progressively less. By far the bigger levers on your final balance are the interest rate and the length of time invested, not how often interest is credited. So when comparing accounts, weigh the rate first and treat compounding frequency as a minor tiebreaker.

Because the earliest dollars get the most years to compound, and those extra years matter more than extra contributions. A classic illustration: someone who invests $5,000 a year from age 25 to 35 (10 years, $50,000 total) and then stops can end up with more at age 65 than someone who invests $5,000 a year from age 35 to 65 (30 years, $150,000 total), assuming a steady 7% return. The early investor contributed only a third as much, but their balance enjoys roughly 30 additional years of compounding before retirement, which more than makes up the difference. The lesson is that time in the market is the most valuable input you have—starting sooner, even with smaller amounts, often beats starting later with more.

Yes—for any realistic long-term plan, you should account for inflation. Inflation steadily reduces what each dollar can buy, so a large future balance is worth less than the same number sounds today. At a 3% inflation rate, money loses about half its purchasing power roughly every 24 years; at that rate, $1,000,000 in 30 years would buy only about what $412,000 buys today. There are two simple ways to handle this. You can subtract your expected inflation rate from your return rate to work in real terms (for example, 7% minus 3% gives a 4% real return), or you can use this calculator's inflation adjustment feature, which restates your projected balance in today's dollars. Either approach keeps your goals grounded in real spending power.

They can meaningfully slow it, especially in ordinary taxable accounts. Every year that dividends, interest, or realized gains are taxed, less money stays invested to compound in future years—a drag that grows the longer you invest. Holding investments longer can help, since long-term capital gains are generally taxed at lower rates than short-term gains in the United States. The larger advantage comes from tax-advantaged retirement accounts: a traditional 401(k) or IRA defers tax until withdrawal, and a Roth version can grow and be withdrawn tax-free in retirement, so your balance compounds without an annual tax bite. For 2026, the contribution limits are $23,500 for a 401(k) and $7,000 for an IRA, which is why many savers prioritize filling these accounts first.