Question 1

What's the difference between compound interest and simple interest?

Accepted Answer

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus previously earned interest, so your balance grows faster as interest starts earning its own interest.

Question 2

How often does this calculator compound interest?

Accepted Answer

Monthly — the annual rate you enter is divided by 12, and interest is added to the balance every month, the most common compounding frequency for savings and investment estimates.

Question 3

Does adding monthly contributions actually make a big difference?

Accepted Answer

Yes — regular contributions compound alongside your starting balance, and often contribute more to the final total than the initial deposit itself over long periods.

Question 4

What does the chart show?

Accepted Answer

It compares your total contributions (what you actually put in) against your total balance (what it grew to), so you can see how much came from interest versus your own deposits.

Question 5

What does the "in today's dollars" figure mean?

Accepted Answer

It's your future value discounted by the inflation rate you enter, showing roughly what that future amount would be worth in today's purchasing power — enter your best estimate for average inflation (historically around 2-3% in many developed economies) to see the difference from the raw, non-adjusted figure.

Question 6

What's the "Rule of 72" note about?

Accepted Answer

A quick mental-math shortcut: dividing 72 by your interest rate gives roughly how many years it takes your money to double. It's an approximation, most accurate for rates between about 6% and 10%, but useful for sanity-checking the calculator's more precise result.

Compound Interest Calculator

How to use it

Example

How it works

Frequently asked questions

Related guides

Related tools