The compound interest formula
P is your starting balance, r the annual rate, k how many times per year interest compounds, and t the number of years. With monthly deposits, each deposit compounds from the month it is added. This calculator adds deposits at the end of each month.
The rule of 72
For a quick estimate, divide 72 by the annual return to get roughly how many years your money takes to double. At 7%, that's about 10.3 years.
Frequently asked questions
Does compounding frequency matter much?
Less than you might think. At 7%, daily compounding earns only slightly more than monthly. The rate and the time invested matter far more.
What return should I assume?
Many planners use 5–7% a year for a diversified stock portfolio after inflation, and lower figures for savings accounts. Returns are never guaranteed.
Is compound interest the same as APY?
APY is the yearly rate after compounding is counted, so it is what you actually earn in a year.