📈Compound Interest

What it models

A starting amount, a monthly deposit, an annual rate and a term. The balance advances month by month — deposits added, interest compounded at the chosen frequency — and the year-by-year table splits the final figure into what you paid in and what interest contributed. The bar makes the punchline visible: run 20+ years and interest overtakes the deposits.

Reading the result honestly

Compound interest pays interest on interest, so growth accelerates: the early years look disappointing and the late years look implausible, and both are correct. The rule of 72 gives the feel — money doubles roughly every 72 ÷ rate years, so ~14 years at 5%. Time in the market is the dominant variable, which is the entire case for starting early with small amounts over starting late with large ones.

What the model deliberately ignores: tax, fees, inflation, and the fact that real returns vary year to year rather than arriving smoothly. A "5% average" with real-world volatility ends somewhere different from a smooth 5% — so treat the output as arithmetic, not a forecast, and nothing here is financial advice. The same mechanism pointed the other way — compounding working against you — is the loan calculator, and our guide to loan interest walks through it.

Frequently asked questions