Compound Interest Calculator

Compound interest is often called the eighth wonder of the world — and for good reason. Unlike simple interest, which only grows on your original principal, compound interest earns interest on your accumulated interest too.

• Time is the biggest factor — $10,000 invested at 8% for 10 years becomes ~$21,600. Over 30 years it becomes ~$100,600. The last 10 years generated 4x more growth than the first 10 — that's compounding at work.
• Regular contributions amplify growth — Adding $500/month to that same investment at 8% over 30 years turns it into over $745,000, of which $190,000 is your contributions and $555,000 is interest. Your money did most of the work.
• Start early, even if the amounts are small — Someone who invests $200/month from age 25 to 35 (10 years, $24,000 total) and then stops will have more at 65 than someone who invests $200/month from age 35 to 65 (30 years, $72,000 total), assuming the same 8% return.

Understanding compound interest is essential for real estate investors and homebuyers because it affects both sides of the equation — your savings growth and your borrowing costs.

• Saving for a down payment — Use this calculator to project how long it will take to save 20% for a home. A high-yield savings account at 4-5% APY will grow your down payment fund faster than a regular checking account.
• Mortgage interest works against you — Your mortgage also compounds (monthly, in most cases). On a $400,000 mortgage at 7%, you'll pay over $558,000 in interest over 30 years. That's why even small rate differences matter enormously.
• Rental income reinvested — If you reinvest rental property cash flow, that income compounds. $500/month in positive cash flow reinvested at 8% over 20 years grows to about $295,000 — enough for down payments on additional properties.

• Start now, not later — Every year you wait costs you disproportionately because you lose the most powerful years of compounding (the final ones). Even $50/month starting today beats $200/month starting in 10 years.
• Automate your contributions — Set up automatic transfers to your savings or investment account. Consistency matters more than timing the market.
• Use tax-advantaged accounts — 401(k)s, IRAs, and Roth accounts let your money compound without the drag of annual taxes. The difference over 30 years can be hundreds of thousands of dollars.
• Reinvest dividends and interest — Don't withdraw your earnings. Every dollar reinvested earns its own interest, accelerating the compounding effect.
• Minimize fees — A 1% management fee might sound small, but it reduces your effective return every year. Over 30 years, a 1% fee on a $500,000 portfolio costs you over $300,000 in lost growth. Choose low-cost index funds when possible.