Investment growth calculator
Compound Interest Calculator
Compound interest is the most powerful force in personal finance. Enter your numbers and see exactly what your money grows to — and how much of it comes from returns rather than contributions.
How compound interest works
Compound interest means you earn returns on your returns — not just on your original investment. In year 1, you earn returns on your principal. In year 2, you earn returns on your principal plus last year's returns. This accelerates dramatically over time.
The compound interest formulaFV = P × (1+r)^n + PMT × ((1+r)^n - 1) / r
Where: P = principal, r = monthly rate, n = months, PMT = monthly contribution
The rule of 72
A quick mental shortcut: divide 72 by your annual return rate to get the approximate number of years for your money to double. At 7% returns, money doubles every 72÷7 ≈ 10.3 years. At 10%, every 7.2 years.
FAQs
What return rate should I use?
The global equity market has returned roughly 7% annually after inflation over the long term. 7% is the most commonly used assumption for FIRE planning. Optimistic scenarios use 10%, conservative scenarios use 5%. Don't use more than 10% — it leads to unrealistic expectations.
Does this account for inflation?
If you use a 7% return rate, that's roughly the nominal return. Real (inflation-adjusted) returns are closer to 5%. For FIRE planning, you can either use 7% and expect your FIRE number to rise with inflation, or use 5% and work in today's money. This calculator uses nominal returns.