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Results
Portfolio Growth Over Time
Year-by-Year Breakdown
| Year | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $6,000 | $16,000 | $919 | $16,919 |
| 2 | $6,000 | $22,000 | $2,339 | $24,339 |
| 3 | $6,000 | $28,000 | $4,294 | $32,294 |
| 4 | $6,000 | $34,000 | $6,825 | $40,825 |
| 5 | $6,000 | $40,000 | $9,973 | $49,973 |
| 6 | $6,000 | $46,000 | $13,782 | $59,782 |
| 7 | $6,000 | $52,000 | $18,299 | $70,299 |
| 8 | $6,000 | $58,000 | $23,578 | $81,578 |
| 9 | $6,000 | $64,000 | $29,671 | $93,671 |
| 10 | $6,000 | $70,000 | $36,639 | $106,639 |
| 11 | $6,000 | $76,000 | $44,544 | $120,544 |
| 12 | $6,000 | $82,000 | $53,455 | $135,455 |
| 13 | $6,000 | $88,000 | $63,443 | $151,443 |
| 14 | $6,000 | $94,000 | $74,587 | $168,587 |
| 15 | $6,000 | $100,000 | $86,971 | $186,971 |
| 16 | $6,000 | $106,000 | $100,683 | $206,683 |
| 17 | $6,000 | $112,000 | $115,820 | $227,820 |
| 18 | $6,000 | $118,000 | $132,486 | $250,486 |
| 19 | $6,000 | $124,000 | $150,790 | $274,790 |
| 20 | $6,000 | $130,000 | $170,851 | $300,851 |
About This Calculator
The Power of Compound Interest
Compound interest is the interest you earn on your interest. Albert Einstein reportedly called it the "eighth wonder of the world." The key insight: the earlier you start, the more time compounding has to work its magic.
How to Maximize Compounding
- Start early — time is the most powerful factor in compounding
- Invest consistently — regular contributions amplify growth
- Reinvest dividends and interest
- Choose accounts with tax advantages (IRA, 401k)
- Avoid early withdrawals that break the compounding chain
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on your initial principal plus accumulated interest from previous periods. It creates a snowball effect: your money grows, then the growth generates more growth.
How often is interest compounded?
Interest can be compounded daily, monthly, quarterly, or annually. More frequent compounding results in slightly higher returns. Savings accounts typically compound daily, while CDs may compound monthly.
What's the rule of 72?
At 7% annual return, your money doubles approximately every 10 years (72 divided by the interest rate). This simple formula helps estimate how fast your investments grow.