Compound Interest Calculator - NerdWallet

For savers, the definition of compound interest is basic: It's the interest you earn on both your original money and on the interest you keep ... AdvertiserdisclosureYou’reourfirstpriority.Everytime.Webelieveeveryoneshouldbeabletomakefinancialdecisionswithconfidence.Andwhileoursitedoesn’tfeatureeverycompanyorfinancialproductavailableonthemarket,we’reproudthattheguidanceweoffer,theinformationweprovideandthetoolswecreateareobjective,independent,straightforward—andfree.Sohowdowemakemoney?Ourpartnerscompensateus.Thismayinfluencewhichproductswereviewandwriteabout(andwherethoseproductsappearonthesite),butitinnowayaffectsourrecommendationsoradvice,whicharegroundedinthousandsofhoursofresearch.Ourpartnerscannotpayustoguaranteefavorablereviewsoftheirproductsorservices.Hereisalistofourpartners.CompoundInterestCalculatorMargaretteBurnetteJuly8,2021InitialDepositContributionsmonthlyannuallyInvestmentTimeSpan5yearsEstimatedRateofReturnCompoundFrequencydailymonthlyannuallyFutureBalance$11,000PrincipalInterestSavemoremoney.UseNerdWallettofindabetterbankaccount.FindanAccountYoursavingsaccountbalancesandinvestmentscangrowmorequicklyovertimethroughthemagicofcompounding.Usethecompoundinterestcalculatorabovetoseehowbigadifferenceitcouldmakeforyou.UsingthiscompoundinterestcalculatorTryyourcalculationsbothwithandwithoutamonthlycontribution—say,$50to$200,dependingonwhatyoucanafford.Thissavingscalculatorincludesasamplerateofreturn.Toseetheinterestyoucanexpect,compareratesonNerdWalletforthousandsofsavingsaccountsandcertificatesofdeposit.Readytobegin?YoucanstartsavingwithsomeofourfavoritesavingsaccountsorIRAproviders.SavingsCashManagementCDCheckingMoneyMarketLearnMoreMemberFDICLendingClubHigh-YieldSavingsAPY0.60%Min.balanceforAPY$2,500LearnMoreFederallyinsuredbytheNCUAAlliantCreditUnionHigh-RateSavingsAPY0.55%Min.balanceforAPY$100LearnMoreMemberFDICDiscoverBankOnlineSavingsAPY0.40%AdvertisedOnlineSavingsAccountAPYisaccurateasof02/12/2021Min.balanceforAPY$0Thesecashaccountscombineservicesandfeaturessimilartochecking,savingsand/orinvestmentaccountsinoneproduct.Cashmanagementaccountsaretypicallyofferedbynon-bankfinancialinstitutions.Thesecashaccountscombineservicesandfeaturessimilartochecking,savingsand/orinvestmentaccountsinoneproduct.Cashmanagementaccountsaretypicallyofferedbynon-bankfinancialinstitutions.LearnMoreonSoFi'swebsiteSoFiMoney®APY0.25%Min.balanceforAPY$500LearnMoreonWealthfront'swebsiteWealthfrontCashAccountAPY0.10%Min.balanceforAPY$1CDs(certificateofdeposit)areatypeofsavingsaccountwithafixedrateandterm,andusuallyhavehigherinterestratesthanregularsavingsaccounts.CDs(certificateofdeposit)areatypeofsavingsaccountwithafixedrateandterm,andusuallyhavehigherinterestratesthanregularsavingsaccounts.LearnMoreMemberFDICCapitalOne360CDAPY0.70%Term2yearsLearnMoreMemberFDICCapitalOne360CDAPY1.00%Term5yearsCheckingaccountsareusedforday-to-daycashdepositsandwithdrawals.Checkingaccountsareusedforday-to-daycashdepositsandwithdrawals.LearnMoreDepositsareFDICInsuredChimeSpendingAccountAPYN/AMonthlyfee$0LearnMoreDepositsareFDICInsuredOneSpendAPYN/AMonthlyfee$0LearnMoreMemberFDICCitiPriorityCheckingAPY0.03%0.03%AnnualPercentageYieldMonthlyfee$30LearnMoreMemberFDICLendingClubRewardsCheckingAPY0.10%0.10%APYonbalancesof$2,500–$99,999Monthlyfee$0Moneymarketaccountspayratessimilartosavingsaccountsandhavesomecheckingfeatures.Moneymarketaccountspayratessimilartosavingsaccountsandhavesomecheckingfeatures.LearnMoreMemberFDICCITBankMoneyMarketAccountAPY0.45%Min.balanceforAPY$0.01LearnMoreMemberFDICQuonticMoneyMarketAccountAPY0.40%Min.balanceforAPY$0LearnMoreMemberFDICAxosBank®HighYieldMoneyMarketAPY0.25%Min.balanceforAPY$0EXPLOREMOREACCOUNTSHere’sadeeperlookathowcompoundingworks:Whatiscompoundinterest?Forsavers,thedefinitionofcompoundinterestisbasic:It’stheinterestyouearnonbothyouroriginalmoneyandontheinterestyoukeepaccumulating.Compoundinterestallowsyoursavingstogroweverfasterovertime.Inanaccountthatpayscompoundinterest,suchasastandardsavingsaccount,thereturngetsaddedtotheoriginalprincipalattheendofeverycompoundingperiod,typicallydailyormonthly.Eachtimeinterestiscalculatedandaddedtotheaccount,thelargerbalanceresultsinmoreinterestearnedthanbefore.Forexample,ifyouput$10,000intoasavingsaccountwitha1%annualyield,compoundeddaily,you’dearn$101ininterestthefirstyear,$102thesecondyear,$103thethirdyearandsoon.After10yearsofcompounding,youwouldhaveearnedatotalof$1,052ininterest.Butremember,that’sjustanexample.Forlonger-termsavings,therearebetterplacesthansavingsaccountstostoreyourmoney,includingRothortraditionalIRAsandCDs.CompoundinginvestmentreturnsWhenyouinvestinthestockmarket,youdon’tearnasetinterestratebutratherareturnbasedonthechangeinthevalueofyourinvestment.Whenthevalueofyourinvestmentgoesup,youearnareturn.Ifyouleaveyourmoneyandthereturnsyouearninvestedinthemarket,thosereturnsarecompoundedovertimeinthesamewaythatinterestiscompounded.Ifyouinvested$10,000inamutualfundandthefundearneda7%returnfortheyear,you’dgain$700,andyourinvestmentwouldbeworth$10,700.Ifyougot anaverage7%returnthefollowingyear,yourinvestmentwouldthenbeworth$11,449.Overtheyears,thatmoneycanreallyaddup:Ifyoukeptthatmoneyinaretirementaccountover30yearsandearnedthataverage7%return,forexample,your$10,000wouldgrowtomorethan$76,000.Inreality,investmentreturnswillvaryyeartoyearandevendaytoday.Intheshortterm,riskierinvestmentssuchas stocksorstockmutualfundsmayactuallylosevalue.Butovera longtimehorizon,historyshowsthatadiversifiedgrowthportfoliocanreturnanaverageof6%to7%annually.Investmentreturnsaretypicallyshownatanannualrateofreturn.Compoundingcanhelpfulfill yourlong-termsavingsandinvestmentgoals,especiallyifyouhavetimetoletitworkitsmagicoveryearsordecades.Youcanearnfarmorethanwhatyoustartedwith.MoreNerdWalletcalculatorsHomeaffordabilityMortgagepaymentDownpaymentStudentloansRetirementCompoundingwithadditionalcontributionsAsimpressiveascompoundinterestmightbe,progressonsavingsgoalsalsodependsonmakingsteadycontributions.Let’sgobacktotheexampleabove.Bydepositinganadditional$100eachmonthintoyoursavingsaccount,you’dendupwith$23,677after10years,whencompoundeddaily.Theinterestwouldbe$1,677ontotaldepositsof$22,000.Makesmarterinvestments.LetNerdWallethelpfindthebestbrokerforyou.FindaBroker