Compound Interest Calculator
Why Time Is Your Most Valuable Financial Asset
Most people dramatically underestimate how much a single investment can grow over decades. A $10,000 investment at 7% annually doesn't just become $20,000 in 20 years — it becomes nearly $40,000. That's compound interest at work: your returns earn returns, which earn more returns, creating a snowball effect that gets more powerful every year you leave it alone. But there's a catch. Inflation erodes the real value of that growth over time. This calculator shows you both sides of the story — how much your money grows on paper, and what it's actually worth in today's dollars when you factor in the rising cost of everything else.
Compound Interest & Real Return Calculator
Model nominal growth, after-tax returns, and inflation-adjusted purchasing power
Investment
Initial investmentYour starting principal. Even a small amount benefits from compounding - the earlier you start, the more doublings you capture.
Annual contributionThe amount you add each year. Consistent contributions dramatically accelerate growth, especially in the early years.
Annual return7% reflects the long-term historical real return of a diversified US stock portfolio. Small differences in return rate produce dramatically different outcomes over 20+ years.
Tax
Taxable accountCapital gains are taxed when you sell. Dividends may be taxed annually. Tax drag can cost hundreds of thousands over a long horizon.
401k / IRA (tax-deferred)All growth is deferred until withdrawal, when the full balance is taxed as ordinary income. Best when you expect to be in a lower tax bracket in retirement.
RothContributions are after-tax, but all growth and withdrawals are completely tax-free. Best when you expect to be in a higher bracket in retirement or want tax-free income in retirement.
Account type
Taxable: capital gains taxed at sale.
Inflation
Inflation rate3% is the historical US average. At 3%, $1 today is worth about $0.74 in 10 years and $0.55 in 20 years.
Real valueThe inflation-adjusted chart shows what your balance is actually worth in today's dollars. This is the number that matters for retirement planning - not the nominal balance.
Compound Interest & Real Return Calculator - Results
Nominal balance
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After-tax value
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Real value (today's $)
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Total contributed
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Total gain
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Purchasing power lost
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Nominal (compound)
After-tax value
Real value (inflation-adj.)
Simple interest
Disclaimer: Results are estimates for illustrative purposes only and do not constitute financial advice. Tax treatment depends on your individual circumstances and jurisdiction. Consult a qualified financial advisor before making investment decisions. Past returns do not guarantee future results.