Compound Interest Savings Calculator

Everyone wants to know how to make their savings grow. Compound interest can have a dramatic effect on the growth of series of regular savings and initial lump sum deposits. Use this savings calculator to see how compound interest works, and determine the future value of your savings and lump sum.



How Compound Interest Works

By saving early, you can take advantage of the power of compound interest to earn and save even more. Compound interest essentially means you’re earning interest on top of interest. If you save $100 and earn $10 in interest over time, you’ll start earning interest on $110, not $100. As the number grows with interest, you earn more in interest. In contrast, with simple interest you are earning a set rate. You might earn $10 on your $100, then another $10 and another $10.

Compound interest works best if you give it plenty of time. The more time you give it, the more you will earn. Starting to save early means you have to put in less money to get more in interest over time. In other words, you will not have to save as much each month to end up with more.

How to Make Money Grow Faster

Even with the power of compound interest, there are things you can do to make your money grow faster:

  • Invest Your Money: Savings accounts only earn a few percent in interest, so your money will grow slowly. If you invest your money in stocks, bonds, mutual funds, CDs or other vehicles, it may not be as accessible all the time, and you’ll be taking on extra risk, but in exchange, you can earn additional interest, so your money will grow faster. Because of the extra risk, be sure to research investing very carefully before you try it.
  • Keep Taxes in Mind: If your money earns money, you’ll likely need to pay taxes on your earnings. Make sure you understand how your savings and earnings will be taxed and find ways to save money in tax-protected ways. If you are saving for retirement, placing your savings in an IRA allows you to enjoy tax savings. If you are saving for college, a 529 plan allows you to save on taxes.
  • Add Money Regularly: With compound interest, you can save money once and keep making interest on your amount. However, you’ll earn more if you set aside money each month so the principal amount grows and you keep earning interest on an ever-growing amount.
  • Keep an Eye Out for Inflation: Inflation will erode the value of your savings. You’ll need to keep putting money aside and find ways to earn more interest to stay ahead of inflation, especially if your savings are for the long term.

Use Money Help Center free calculators to create a budget and find ways to save more, so you can grow your nest egg. Our free calculators are unbiased and confidential, so you can rely on them without having to worry about giving us personal information.