⚙ Interactive calculator — enter values to calculate instantly.
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⚙ Interactive calculator — enter values to calculate instantly.
Compound interest means you earn interest on your interest — your money grows exponentially rather than linearly. The formula: A = P(1 + r/n)^(nt) where A is final amount, P is principal, r is annual rate, n is compounding frequency, and t is time in years. Daily compounding produces slightly more than monthly, which produces slightly more than annual compounding.
| Compounding | Final Amount | Interest Earned |
|---|---|---|
| Annual | $16,289 | $6,289 |
| Monthly | $16,470 | $6,470 |
| Daily | $16,487 | $6,487 |
Divide 72 by the interest rate to approximate years to double your money. At 4% (HYSA): 72/4 = 18 years. At 7% (stock market): 72/7 = 10.3 years. At 10%: 72/10 = 7.2 years. At 36% (credit card debt): 72/36 = 2 years — meaning debt DOUBLES in 2 years if unpaid. The rule of 72 works for both growing investments AND growing debt.
| Investment | Approx Rate | $50K in 20 Years |
|---|---|---|
| Savings Account | 0.5% | $55,254 |
| HYSA | 4.5% | $121,028 |
| CD (5-year) | 5.0% | $132,665 |
| Bonds (BND) | 4.0% | $109,556 |
| S&P 500 Index | 10% | $336,375 |
Use this calculator as a starting point, not a final answer. Run three scenarios: pessimistic (lower returns, higher costs, worst-case tax rates), base case (your expected scenario), and optimistic (favorable conditions). The range between these three scenarios tells you how much uncertainty surrounds your plan and how much buffer you need.
Once you have your numbers, cross-reference them with complementary calculators. A mortgage payment should be checked against your overall budget and DTI ratio. A retirement projection should account for Social Security income, potential pension, and healthcare costs in retirement. Tax calculations should be checked against available deductions and credits you may qualify for. No single calculator captures everything.
Where you hold investments matters as much as what you hold. High-growth assets belong in Roth accounts where growth is tax-free. Income-producing assets like bonds belong in traditional 401(k) or IRA where taxes are deferred. Tax-managed index funds belong in taxable brokerage where you can harvest losses. This asset location strategy adds 0.2-0.4% annually to after-tax returns without changing your investments at all.
The lifetime value of proper tax planning for a median American household is approximately $150,000-300,000 in additional wealth at retirement — the difference between tax-smart and tax-naive investment management over 30 years. Most of this benefit comes from three decisions made once: choosing the right account types, maximizing employer match, and selecting low-cost index funds.