Growing

Compound Interest

How a starting amount and steady monthly deposits grow over time.

Why compounding matters most at the end

Compound growth means your returns start earning returns of their own. In the early years, most of the balance is money you deposited. Later, growth overtakes deposits and the curve bends upward. That is why starting five years earlier often matters more than saving a little more each month.

The calculator adds deposits at the end of each month and compounds monthly at the annual rate you enter ÷ 12. It does not include taxes, fees or inflation. A 1% annual fund fee can cut a 30-year ending balance by about a quarter, so check expense ratios.

Picking a return

Broad U.S. stock indexes have returned roughly 10% a year over long periods before inflation, with large swings. High-yield savings pays far less but does not fall. Many planners use 6–7% for a stock-heavy mix to stay conservative.

Common questions

How does compound interest work?

Your returns start earning returns of their own. Early on, most of the balance is money you deposited. Later, growth overtakes deposits and the balance rises faster each year.

What return should I use?

Broad stock indexes have historically returned roughly 7–10% a year before inflation over long periods, with large swings. Many planners use 6–7% to stay conservative. Savings accounts pay less but don't fall.

How much will $500 a month grow to in 25 years?

Starting with $10,000 and adding $500 a month at 7% a year, the balance reaches about $462,000 after 25 years, of which about $302,000 is growth.