Monthly contributions are deposited at month end. The selected compounding frequency is converted to an equivalent monthly rate.
What is compound interest?
Compound interest is interest earned on both your original principal and the interest that has already been added to it. Instead of linear growth (simple interest), compounding produces exponential growth over time — the longer the runway, the steeper the curve.
The Rule of 72
Want a quick estimate of how long it takes to double your money? Divide 72 by your annual interest rate. At 7%, that's roughly 10.3 years (72 ÷ 7 ≈ 10.3). At 10%, it's about 7.2 years. The rule works best for rates between 5% and 12% — a handy mental shortcut when you don't have a calculator nearby.
Why starting early matters
The most powerful variable in compound interest is time. Someone who invests $200/month from age 25 to 35 (10 years) and then stops will often end up with more than someone who starts at 35 and invests $200/month for 30 years. The early starter's money has decades of compounding runway — the later starter, even with three times the contributions, never catches up. That's the exponential curve at work: it starts slow, then accelerates dramatically. Every year you delay is a year your money can't be working for you.
Compound frequency matters
Daily compounding earns slightly more than monthly, which earns more than quarterly, and so on. The difference is small at low rates and short timeframes, but at higher rates (12%+) over 20+ years, daily compounding can add thousands in extra interest compared to annual compounding. The calculator above lets you toggle between all five frequencies to see the gap for yourself.