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How to Use Our Compound Interest Calculator

3 min read

How to Use Our Compound Interest Calculator

Our Compound Interest Calculator lets you see exactly how your money grows over time. Whether you are planning for retirement, saving for a goal, or just curious about the math, here is how to use it effectively.

Entering Your Details

  • Initial Investment -- The amount you are starting with. This can be any amount, from $100 to $1,000,000.
  • Monthly Contribution -- How much you plan to add each month. Consistent contributions are where the real magic happens.
  • Annual Interest Rate -- Your expected annual return. For a diversified stock portfolio, 7% (inflation-adjusted) is a reasonable long-term assumption. For savings accounts, use the current APY.
  • Time Period -- How many years you plan to invest. The longer the time horizon, the more dramatic the compounding effect.
  • Compounding Frequency -- How often interest is calculated and added to your balance. Monthly compounding is most common for investments.

What the Results Show

Final Balance -- Your total portfolio value at the end of the time period, including all contributions and compounded returns.

Total Contributions -- The actual cash you put in. Comparing this to your final balance shows how much of your wealth came from compound growth versus your own deposits.

Total Interest Earned -- The difference between your final balance and total contributions. This is the money your money earned for you.

The Compounding Insight

The most powerful insight comes from extending the time period. Watch what happens to $500/month at 7% annual return:

  • 10 years: $86,542 ($60,000 contributed)
  • 20 years: $260,464 ($120,000 contributed)
  • 30 years: $609,985 ($180,000 contributed)
  • 40 years: $1,318,883 ($240,000 contributed)

In the final decade alone, your portfolio grew by over $700,000 -- more than in the first 30 years combined. That is compounding at work.

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