Compound interest means earning returns on your original money and on the returns it has already earned. These eight examples show what that looks like in practice.
Try the Money Growth Calculator$1,000 invested at 7% a year, compounded annually, grows to about $7,612 after 30 years. You never add another dollar — over $6,600 of that is growth on growth.
The same 7% on $5,000 becomes about $38,061. Five times the starting amount gives five times the result — compounding scales with whatever you put in.
Investing $500 every month for 25 years means putting in $150,000 of your own money. Depending on the return (compounded monthly), you could end up with:
| Annual return | Value after 25 years |
|---|---|
| 5% | ~$297,800 |
| 7% | ~$405,000 |
| 10% | ~$663,400 |
$10,000 at 7% a year roughly doubles about every 10 years — and each doubling adds more dollars than the last:
The first decade adds under $10,000. The fourth adds over $73,000. That's why time matters more than almost anything else. See the rule of 72 for a quick way to estimate doubling time.
Two people each invest $300 a month at 7% until age 65:
The early starter contributes only $36,000 more, but ends up with more than twice as much. More on this in compound interest for young investors and starting late.
$10,000 at 5% for 20 years:
Same rate, same time — compounding adds an extra $6,500 simply by earning interest on interest.
$10,000 at 5% for 10 years, compounded:
More frequent compounding helps, but only a little. The rate you earn and how long you stay invested matter far more.
Start with $10,000, add $500 a month for 30 years, compounded monthly. Earning 7% gives about $691,200. If fees cut that to 6%, you'd have about $562,500 — roughly $128,700 less. Fees compound against you just like returns compound for you.
A = P(1 + r/n)nt, where P is the starting amount, r the annual rate, n the number of compounding periods per year and t the number of years. See how compound interest works for a walkthrough.
No. Investment returns vary from year to year, and these examples use steady rates for illustration. Savings accounts and term deposits pay more predictable interest but usually at lower rates.
No. They show nominal amounts before tax and inflation. To think in today's dollars, subtract an inflation estimate (for example 2–3%) from the return.
Use the Money Growth Calculator to enter your own starting amount, contributions, return and time frame.