Compound Interest Calculator

The "Magic" of compound interest

Compound interest is often called the eighth wonder of the world because of how it accelerates wealth over long periods. Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated on the principal plus all of the interest that has already accumulated.

This means your money earns interest, and then that interest earns interest. In the early years, the growth may seem slow. However, as the balance grows, the interest payments become much larger, eventually dwarfing your original contributions. This is why "time in the market" is often considered more important than the exact timing of your investments.

Accounting for inflation

While seeing a large future balance is exciting, it is important to remember that the cost of living will also rise over time. A dollar today will buy more than a dollar twenty years from now. This calculator includes an inflation adjustment to help you understand the "purchasing power" of your future nest egg in today's terms.