Compound Interest Calculator
See how your investments can grow exponentially over time with the power of compounding.
Investment Details
Amount you plan to add every month.
Future Investment Value
$300,851
After 20 years
Growth Breakdown
* This is a pre-tax estimation. Depending on your account type (e.g., standard brokerage vs Roth IRA), you may owe Capital Gains Tax on your earnings upon withdrawal.
The Magic of Compound Interest
Albert Einstein reportedly called compound interest the "eighth wonder of the world." Unlike simple interest, which only pays you on your initial deposit, compound interest pays you interest on your initial deposit plus all the interest you've already earned. Over long periods, this creates an exponential snowball effect.
Taxes on Your Investments (US)
This calculator shows your pre-tax growth. In the United States, how your earnings are taxed depends entirely on the type of account you use:
👉 Standard Brokerage Account: You will pay Capital Gains Tax when you sell. If you hold the asset for over a year, you get favorable long-term rates (0%, 15%, or 20% depending on your income).
👉 Traditional 401(k) or IRA: Your money grows tax-deferred, but you will pay ordinary income tax on your withdrawals in retirement.
👉 Roth IRA or Roth 401(k): You contribute after-tax money, but your money grows completely tax-free, and withdrawals in retirement are 100% tax-free!
Frequently Asked Questions
Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods. It makes your money grow faster over time.
In the US, if you invest in a standard brokerage account, you will owe Capital Gains Tax when you sell your investments. Short-term gains (held < 1 year) are taxed as ordinary income, while long-term gains have lower tax rates (0%, 15%, or 20%).
The more frequently interest compounds, the faster your money grows. Monthly compounding will always yield a slightly higher final balance than annual compounding at the same interest rate.