What this page sets up
The calculator opens with 10,000 to start, 200 added at the end of every month, 7% a year compounded monthly, over 20 years. Change any of them: the result, the chart and the year-by-year schedule update as you type. The side-by-side cards show what the same money would earn with simple interest, which only ever pays on the amounts you put in.
Reading the chart
Each bar is one year. The blue part is money you put in, the green part is interest. In the first years almost all of the growth is your own deposits. Later the interest earned each year is larger than the deposits, because interest is being paid on earlier interest. The line shows the simple-interest balance for comparison, and the gap between the line and the top of the bars is what compounding adds.
Getting the most out of compounding
- Time matters most. The last years add more than the first ones, so starting earlier beats adding a little more later.
- Deposit at the start of the month if you can. Switch When to Start of each period: every deposit earns one more month of interest.
- Compare accounts by APY, not by the stated rate. The APY already includes the compounding frequency.
- Work backwards. Choose Deposit needed to find the monthly saving that reaches a goal, or Time needed to see when you get there.
The same savings at each compounding frequency
$10,000.00 to start and $200.00 at the end of every month for 20 years at 7% a year, as the calculator works it out:
| Compounding | APY | Interest earned | Final balance |
|---|---|---|---|
| Annually (1/yr) | 7% | $82,204.12 | $140,204.12 |
| Semiannually (2/yr) | 7.122% | $84,522.66 | $142,522.66 |
| Quarterly (4/yr) | 7.186% | $85,739.17 | $143,739.17 |
| Monthly (12/yr) | 7.229% | $86,572.72 | $144,572.72 |
| Weekly (52/yr) | 7.246% | $86,898.28 | $144,898.28 |
| Daily | 7.25% | $86,982.48 | $144,982.48 |
| Continuously | 7.251% | $86,996.49 | $144,996.49 |
Rule of 72 vs the exact doubling time
Years for a lump sum to double with no deposits: the rule of 72 (72 ÷ rate) next to the exact time, ln 2 ÷ ln(1 + APY).
| Rate a year | Rule of 72 | Exact, compounded yearly | Exact, compounded monthly |
|---|---|---|---|
| 2% | 36.0 years | 35.0 years | 34.7 years |
| 3% | 24.0 years | 23.4 years | 23.1 years |
| 4% | 18.0 years | 17.7 years | 17.4 years |
| 5% | 14.4 years | 14.2 years | 13.9 years |
| 6% | 12.0 years | 11.9 years | 11.6 years |
| 7% | 10.3 years | 10.2 years | 9.9 years |
| 8% | 9.0 years | 9.0 years | 8.7 years |
| 10% | 7.2 years | 7.3 years | 7.0 years |
| 12% | 6.0 years | 6.1 years | 5.8 years |
| 15% | 4.8 years | 5.0 years | 4.6 years |