Compound Interest Calculator

When to use this calculator

Compounding is what turns steady contributions into real wealth, and it rewards the people who start soonest. Reach for this calculator when you are mapping out a 401(k), a Roth or traditional IRA, a brokerage account, or a plain high-yield savings account, and you want a ballpark for where the balance could be in 10, 20 or 30 years. It is a planning tool, not a guarantee.

It answers the everyday questions: what will maxing my IRA each year add up to, should I raise my 401(k) deferral by another two percent, how much does an employer match accelerate things. You set a starting amount, a monthly contribution and an expected return, and it models the period-by-period growth the way retirement accounts actually accumulate.

Reading your result

Your final balance breaks into two pieces: total contributions (your initial deposit plus everything you paid in) and the compound growth layered on top. Watch the growth line — it starts modest and then accelerates, because each year's gains start earning gains of their own. Over a full career that acceleration is where most of the money comes from.

Read the figure as a pre-tax estimate under a constant-return assumption. Real markets are bumpy, so no single year will match. A 7% assumption reflects the long-run average of a diversified stock portfolio before inflation; a high-yield savings account or CD will track well under that, closer to prevailing short-term rates.

A worked example

Start a brokerage or IRA position with $1,000, add $100 a month, and assume 7% a year for 20 years. You contribute $25,000 of your own money, and compounding could add roughly $27,000 on top — a balance near $52,000, with growth actually exceeding what you paid in. That crossover, where the account earns more than you deposit, is the whole point of starting early.

Mistakes to watch for

Most disappointing projections come down to optimistic returns and ignoring the drag of fees, taxes and inflation.

• Plugging in a high return without subtracting expense ratios and advisory fees — a 1% fee compounds against you for decades.
• Forgetting your employer 401(k) match, which is effectively an instant return this calculator does not add for you.
• Treating the nominal balance as spending power — inflation means $52,000 in 20 years buys less than it does today.
• Assuming the rate is locked in; equity returns swing widely year to year.

US accounts and tax notes

How your gains are taxed depends on the wrapper. Traditional 401(k) and IRA contributions are typically pre-tax and grow tax-deferred, so you owe ordinary income tax on withdrawals in retirement. Roth accounts use after-tax dollars but qualified withdrawals come out tax-free. A regular brokerage account has no shelter, so dividends and realized gains can trigger capital gains tax along the way.

Annual contribution limits apply to 401(k)s and IRAs and the IRS adjusts them periodically, so check current figures before assuming you can pay in a given amount. This calculator shows pre-tax growth only — for guidance tied to your bracket and accounts, consult a CPA or fiduciary financial advisor.