Compound Interest Calculator
See how your investments will grow over time with compound interest. Einstein called it "the eighth wonder of the world" - and for good reason!
Compound Interest Calculator
Enter your investment details to see how compound interest builds wealth over time.
Historical stock market average: 7–10%
The Power of Compound Interest
Compound interest is the process where your investment earnings generate their own earnings. Unlike simple interest, where you only earn returns on your principal, compound interest allows you to earn returns on your returns - creating exponential growth over time.
Why Compound Interest Matters:
- Time is your best friend: The earlier you start investing, the more dramatic the effects
- Small amounts add up: Regular contributions, even small ones, can grow substantially
- Exponential growth: Your money grows faster as your balance increases
- Passive wealth building: Your money works for you, even while you sleep
Example Scenarios:
Scenario 1: Starting Early
Invest $10,000 initially + $500/month at 7% for 30 years = $633,000
Scenario 2: Starting Late
Invest $10,000 initially + $500/month at 7% for 15 years = $171,000
The difference? Over $460,000 just by starting 15 years earlier. This is why time in the market beats timing the market!
Maximizing Compound Interest:
- Start investing as early as possible
- Contribute regularly and consistently
- Reinvest all dividends and interest
- Choose investments with good long-term returns (7-10% historically for stocks)
- Keep fees low (use index funds/ETFs)
- Stay invested for the long term - avoid selling
- Use tax-advantaged accounts (TFSA, RRSP in Canada)