USA Compound Interest Calculator
Calculate how your investments can grow with compound interest - essential for retirement planning, education savings, and wealth building in the United States.
Investment Parameters
Example: Retirement Savings
If you invest $10,000 at age 30 with a 7% annual return, compounded monthly, and add $200/month, by age 65 you would have approximately $435,000 for retirement.
Investment Results
USA Tax Considerations
In the United States, investment earnings may be subject to capital gains tax. Retirement accounts like 401(k)s and IRAs offer tax advantages that can significantly enhance compound growth. Consider consulting a tax advisor for your specific situation.
Principal vs Interest
Year-by-Year Growth
Accumulation Over Time
Frequently Asked Questions (USA Focus)
In US retirement accounts like 401(k)s and IRAs, compound interest works by reinvesting earnings to generate additional earnings over time. The key advantage in these accounts is tax deferral (traditional) or tax-free growth (Roth), which allows your money to compound without annual tax drag.
For example, if you contribute $6,000 annually to a Roth IRA starting at age 25 with a 7% return, you could accumulate over $1 million by age 65, completely tax-free.
The Rule of 72 is a simple formula to estimate how long it will take for an investment to double: 72 ÷ interest rate = years to double.
For example, at a 6% annual return, your investment would double in approximately 12 years (72 ÷ 6 = 12). This rule helps US investors quickly estimate growth potential for different investment options.
When the Federal Reserve raises interest rates, savings accounts, CDs, and bonds typically offer higher yields, potentially increasing compound growth for conservative investments. However, rate hikes may negatively impact stock market returns in the short term.
For long-term investors in the US, a diversified portfolio that includes stocks has historically provided better compound growth than interest-rate-sensitive investments alone.
For most Americans seeking compound growth:
- Stock Market Index Funds: Low-cost S&P 500 index funds have historically returned about 10% annually before inflation.
- Tax-Advantaged Retirement Accounts: 401(k)s and IRAs allow tax-deferred or tax-free compounding.
- Dividend Reinvestment Plans (DRIPs): Automatically reinvest dividends to purchase more shares.
- Real Estate Investment Trusts (REITs): Provide compound growth through reinvested dividends.
Inflation reduces the purchasing power of money over time. When calculating compound interest for US investments, it's important to consider the real rate of return (nominal return minus inflation).
For example, if your investment earns 7% annually but inflation is 3%, your real return is only 4%. This is why many financial advisors recommend including inflation-protected securities like TIPS (Treasury Inflation-Protected Securities) in a diversified portfolio.
How to Use This Compound Interest Calculator
Step-by-Step Instructions:
Set Your Initial Investment: Use the slider or input to set your starting amount (principal). For example: $10,000.
Adjust Annual Interest Rate: Set the expected annual return rate. For example: 6% (which is a reasonable long-term stock market average).
Choose Investment Period: Select how many years you plan to invest. For example: 20 years for a retirement goal.
Add Monthly Contributions: If you plan to add money regularly, set a monthly contribution amount. For example: $200/month.
Select Compounding Frequency: Choose how often interest is calculated and added to your investment. Options include:
Annually (once per year)
Quarterly (four times per year)
Monthly (most common for investments)
Daily (common for savings accounts)
Click “Calculate Compound Interest”: See your results instantly in charts and numbers.
Example Scenario:
If a 30-year-old American invests $10,000 with 7% annual return, adds $200/month, and compounds monthly for 35 years (until retirement at 65), they would accumulate approximately $435,000.
Visualizations Provided:
Growth Chart (Line Graph): Shows how your investment grows over time
Principal vs Interest (Circle/Pie Chart): Breaks down what portion is your money vs. earned interest
Year-by-Year Growth (Column Chart): Compares principal and interest accumulation each year
Accumulation Over Time (Area Chart): Visualizes total value growth
Key Features for USA Users:
USA-specific tax considerations and retirement account notes
Examples relevant to American investors (401k, IRA, Roth accounts)
Rule of 72 explanation for quick mental calculations
FAQs addressing common US investment questions
Federal Reserve interest rate impact explanation
This calculator works entirely in your browser with no server-side processing needed. You can save this as an HTML file and open it directly in any modern browser.