How it works
Compound interest means you earn interest on your interest. Each period, growth is added to the balance, so the next period's growth is bigger — a snowball effect.
A = P(1 + r)t + contributions grown the same way
Time matters more than amount: starting 10 years earlier often beats contributing twice as much later.
Frequently asked questions
What is a realistic return?
US stocks averaged ~10% yearly before inflation (~7% after). Savings accounts pay 4–5% (2024–25). Use conservative numbers for planning.
Monthly vs yearly compounding?
More frequent compounding helps slightly, but the rate and time matter far more than frequency.
Why do contributions matter so much?
With $500/month at 8% for 20 years, you contribute $120k but interest adds ~$150k+. Consistency beats timing.
Disclaimer: This calculator provides estimates for educational purposes only and is not financial, tax, or legal advice. Consult a qualified professional before making financial decisions.