How to use the calculator
- Enter your starting amount (zero is fine) and how much you plan to add each month.
- Set the annual return you expect and the number of years. Broad stock index funds have returned roughly 7% a year after inflation over long periods, or about 10% before it; bonds and savings accounts return less. Past returns are no promise.
- Set inflation to see the result in today’s money. Open Advanced to add fund fees, tax drag or a yearly raise in your contribution.
Hover over or tap the chart to see any year. The row under it shows the same plan at returns 1 and 2 points lower and higher, so you can see how much the result depends on the rate you chose.
How compound interest works
Compound interest means you earn returns on your past returns, not only on the money you put in. In the first years most of the balance is your own contributions; later, growth takes over and the curve bends upward. That is why starting early matters more than almost anything else.
The calculator compounds monthly. For a starting amount P, a monthly contribution C and a monthly rate i (the annual return divided by 12), the balance after n months is:
FV = P × (1 + i)^n + C × ((1 + i)^n − 1) / iContributions are added at the end of each month. Fees and tax drag lower the rate before compounding: the rate used is annual return × (1 − tax drag) − fee. The value in today’s money is the balance divided by (1 + inflation)^years.
Example: $500 a month at 7% for 30 years
With nothing to start with and $500 a month at 7% a year, with no fees:
| After | You put in | Balance | In today’s money (2.5% inflation) |
|---|---|---|---|
| 10 years | $60,000 | $86,542 | $67,607 |
| 20 years | $120,000 | $260,463 | $158,953 |
| 30 years | $180,000 | $609,985 | $290,806 |
In the last ten years the balance grows by about $350,000, while you add only $60,000. Keep the same plan going for 40 years instead of 30 and it reaches about $1.31 million: ten more years more than doubles the result.
What fees cost over 30 years
The same $500 a month at 7%, with different yearly fees (expense ratio plus any advisory fee):
| Annual fee | Balance after 30 years | Lost to fees |
|---|---|---|
| 0.05% (index ETF) | $604,002 | $5,983 |
| 0.25% | $580,733 | $29,252 |
| 0.50% | $553,089 | $56,896 |
| 1.00% | $502,258 | $107,727 |
| 2.00% | $416,129 | $193,856 |
A 1% fee looks small but takes about one sixth of the final balance. You can compare fund fees with the ETF screener, which lists the expense ratio of every US-listed ETF.
Common mistakes
- Mixing real and nominal returns. If you enter a return that is already after inflation (such as 7% for stocks), set inflation to 0, or you subtract inflation twice.
- Ignoring fees. Add your fund’s expense ratio under Advanced. Over decades it adds up to a large sum.
- Treating the result as a forecast. Real returns vary from year to year and the order of good and bad years matters. Use the result as a rough guide and check the range at other returns.
The calculator assumes a steady rate. To see how a real stock or ETF compounded, month by month with dividends, try the what if I had invested calculator; to check whether your savings rate keeps up with prices, use the cash vs inflation calculator.
Frequently asked questions
How do I calculate compound interest?
Multiply the starting amount by (1 + rate per period) raised to the number of periods. With monthly contributions, add each contribution grown the same way: FV = P × (1 + i)^n + C × ((1 + i)^n − 1) / i, where i is the monthly rate and n the number of months. The calculator does this month by month, including fees, tax drag and yearly raises.
What annual return should I use?
It depends on what you invest in. Broad US stock index funds have returned roughly 10% a year before inflation over long periods (about 7% after inflation), bonds less, and savings accounts and CDs follow short-term interest rates. Use a conservative figure and check the row of results at other returns.
What does "in today's money" mean?
It is the future balance divided by the growth in prices over the same years, so you can compare it with what money buys now. At 2.5% inflation, prices roughly double in 28 years, so $1 million then buys about what $500,000 buys today.
Should I enter a return before or after inflation?
Either, but not both. If you enter a nominal return (for example 10% for stocks), keep inflation at your estimate to see today's money. If you enter a real return (for example 7%), set inflation to 0, otherwise inflation is counted twice.
What is tax drag?
The part of each year's return lost to taxes on dividends, interest and realized gains in a taxable account. In an IRA, 401(k) or other tax-sheltered account it is usually 0. A broad index fund held in a taxable account often loses roughly 10 to 15% of its return to tax drag.
How often is interest compounded?
Monthly. Contributions are added at the end of each month, and the monthly rate is the annual return divided by 12. Daily or yearly compounding gives slightly different results, but over long periods the difference is small compared with the effect of the return you choose.
Can I put this calculator on my website?
Yes. It is free for any site. Use the embed code generator on this page to choose the theme, currency and starting values, then paste the code into your page. The only condition is to keep the credit line with the two links under the calculator.
Is this financial advice?
No. The results are estimates based on a constant return, for education only. Real markets go up and down, and fees, taxes and your own situation can change the outcome.
Related calculators
- Millionaire CalculatorThe month your savings reach $1 million, and what $1 million will be worth by then.
- Cash vs Inflation CalculatorHow cash in a money market fund or earning nothing did against inflation, month by month since 1954.
- Rule of 72 CalculatorHow long money takes to double, triple or quadruple, with the exact figure alongside.
- Inflation CalculatorWhat things will cost in the future and how much of its value your money loses.
See all free investing calculators, or add live stock quotes to your site with the free stock widgets.
Add this calculator to your website
The calculator is free to embed on any website, personal or commercial, and works on WordPress, Blogger, Wix, Squarespace, Webflow, Ghost and plain HTML. Choose the options, copy the code and paste it into your page.
Preview: this is how the calculator and the credit line will look on your page
Free for personal and commercial websites. Please keep the “by Quotelinks” credit line under the calculator visible and unchanged, and don’t modify the calculator or present it as your own. The <script> line is optional: it sizes the frame to fit the calculator; if your platform removes scripts, the calculator still works at the fixed height. Results are estimates based on the numbers you enter and a constant rate of return. They are for illustration only, not financial advice.