Compound interest calculator
A free compound interest calculator with monthly contributions or withdrawals, for investing or for trading, with a reality check against what real markets have done.
After 20 years
$343,778
- Balance
- Money put in
- Growth
Reality check
Is that return realistic?
Average yearly change of each market over its whole history in our data, prices only (dividends left out). A bar that runs off the right edge is beyond the scale.
Show the year-by-year table
| Year | Put in so far | Taken out so far | Growth so far | Balance |
|---|
How compounding works
Compounding means your gains start earning gains of their own. With 8% a year, $10,000 becomes $10,800 after one year; in the second year the 8% is earned on $10,800, not on $10,000, and so on. Over short periods the difference is small. Over decades it does most of the work.
Choose “Take out” to see how long a pot lasts when you withdraw a fixed amount each month or year; the calculator shows when the money runs out.
The usual formula for a single sum is A = P × (1 + r/n)n×t: P is the starting amount, r the yearly rate, n the number of times a year it compounds, and t the number of years. Regular deposits each grow from the day they are added; the calculator adds them at the end of each month or year.
A quick check without a calculator is the rule of 72: divide 72 by the yearly return to get the years it takes to double. At 8% a year that is about nine years.
Why “1% a day” is not a plan
Trading courses love daily targets. Compounded over a year of 252 trading days, they turn into numbers no market has delivered:
| Gain | One year | Money multiplied by |
|---|---|---|
| 0.1% a trading day | +29% | ×1.3 |
| 0.5% a trading day | +251% | ×3.5 |
| 1.0% a trading day | +1,127% | ×12.3 |
| 2.0% a trading day | +14,597% | ×147.0 |
A steady 1% a trading day would turn every dollar into about 12 in a year. The real markets below did far less, with deep falls along the way. Since 1970 the S&P 500 grew about +8.1% a year, and even Bitcoin, the best performer here, averaged +53.6% a year while falling −83% at its worst.
| Market | Since | A year on average | Best year | Worst year | Worst fall |
|---|---|---|---|---|---|
| S&P 500 | 1970 | +8.1% | +34% | −38% | −57% |
| Nasdaq 100 | 2004 | +14.2% | +54% | −42% | −54% |
| Gold | 2004 | +10.5% | +64% | −28% | −44% |
| Bitcoin | 2014 | +53.6% | +1,369% | −74% | −83% |
| EUR/USD | 1999 | −0.2% | +20% | −13% | −40% |
Losses compound too
A loss needs a bigger gain to undo it, and the bigger the loss, the worse it gets. That is why the size of the worst fall matters as much as the average return.
| After a loss of | You need a gain of |
|---|---|
| −10% | +11.1% |
| −20% | +25.0% |
| −30% | +42.9% |
| −50% | +100.0% |
| −80% | +400.0% |
Questions people ask
What is the difference between simple and compound interest?
Simple interest is paid on the starting amount only. Compound interest is paid on the starting amount plus the interest already earned, so the balance grows faster every year.
Does compounding monthly instead of yearly make a big difference?
A little. At 8% a year, monthly compounding works out to about 8.3% a year; daily compounding to about 8.33%. The rate and the time you stay invested matter far more.
What return should I expect?
No one knows the future. The table above shows what broad markets did in the past two decades, including their worst years. Treat any steady, high return in a calculator, or in an advert, with suspicion.
Does the calculator count fees, taxes or inflation?
No. Enter a return after fees if you want a closer picture, and remember that inflation lowers what the ending balance can buy.
This calculator shows arithmetic, not a forecast or advice. Past market returns do not promise future ones.