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Compound Interest Calculator

Q: How much does $10,000 grow in 20 years?

At 7% a year with $300 added monthly, about $196,665. You would have put in $82,000, and $114,665 of it is interest.

Q: What is compound interest?

Interest that earns its own interest. Each period you earn a return on your balance, and next period that return is part of the balance too, so growth speeds up over time.

Start with $10,000, add $300 a month, and earn 7% a year. After 20 years you'd have about $196,665. You would have paid in $82,000 of your own money, and the other $114,665 is interest doing the work. Change the numbers below. This assumes a steady return and monthly compounding, which real markets don't give you, so treat it as a projection, not a promise.

Compound Interest

$196,665

balance after 20 years

■ you paid in $82,000 ■ interest $114,665

Starting amount

Added each month

Yearly return

7.0%

Years

You pay in$82,000

Interest earned+$114,665

Balance$196,665

Monthly compounding

Where the growth comes from

Early on, almost all the balance is money you put in. Later, interest starts earning interest, and that's when the line bends upward. In this example the interest overtakes your own contributions somewhere in the later years, which is the whole point of starting sooner rather than later.

Balance over time

Year	Paid in	Interest	Balance
5	$28,000	$7,654	$35,654
10	$46,000	$26,022	$72,022
15	$64,000	$59,578	$123,578
20	$82,000	$114,665	$196,665

Monthly compounding, steady return assumed. Real returns vary year to year and are not guaranteed. This is a projection for planning, not financial advice.

How compound interest is worked out

Each month the balance earns the yearly return divided by twelve, and your monthly contribution is added on top. That new, larger balance is what earns the return next month, so the interest itself starts earning interest. Repeating the step for every month of the term is all compounding is.

In this example you start with $10,000 and add $300 a month for 20 years. You pay in $82,000 of your own money, and the balance reaches about $196,665. The gap between the two, $114,665, is interest, and it works out to 58.3% of the final balance.

The 7% yearly return is an assumption, not a guarantee. Real markets move up and down, and monthly compounding is a simplification. Treat the figure as a projection for planning. See the full method, or model a fixed target with the savings goal calculator.

Common questions

How much does $10,000 grow in 20 years?

At 7% a year with $300 added monthly, about $196,665. You'd have put in $82,000, and $114,665 of it is interest.

What is compound interest?

It's interest that earns its own interest. You get a return on your balance, and next period that return is part of the balance too, so the growth builds on itself.

Does adding money monthly matter more than the starting amount?

Over a long term, usually yes. The starting $10,000 compounds, but the steady $300 a month is where most of the $82,000 of contributions comes from, and each deposit then compounds for the years that remain. Small regular amounts add up once time is on their side.

What return should I assume?

There is no correct number, since future returns are unknown. A common planning figure for a diversified stock portfolio is around 7% a year, but a savings account or CD earns far less. Try a lower rate to see a more cautious projection.