What is compound interest?
A plain-language walkthrough of compounding, simple vs. compound growth, and why reinvesting matters.
- Breakdown of the core formula.
- Simple examples you can mirror in the calculator.
Resource hub introduction
This page gathers guides, how-tos, and explanations that help you get the most from the compound interest calculator. Use it as a starting point to explore saving, investing, and planning with compounding.
Featured compound interest guides
Rule of 72 explained
Estimate how long it takes to double money at different rates, plus caveats and examples.
- When the shortcut is useful.
- How to compare with calculator outputs.
Best places for cash in 2025
A snapshot of typical vehicles—high-yield savings, CDs, and short-term bonds—and how compounding works in each.
- Pros and trade-offs for rate, liquidity, and risk.
- Ideas to test with the calculator before choosing.
Retirement compounding roadmap
How steady contributions, realistic returns, and inflation views shape long-term outcomes.
- Building contribution habits.
- Comparing nominal vs. inflation-adjusted results.
Debt and interest reversal
See how compound interest works against you on debt and how to model payoff plans.
- Impact of rates and timing on balances.
- Testing payoff acceleration in the calculator.
Teaching kids about compounding
Kid-friendly ways to show growth over time with simple examples and visuals.
- Short, relatable stories and charts.
- Hands-on calculator prompts for families.
Guide: What is compound interest?
Compound interest means your money can earn interest on both the original principal and any accumulated interest. This feedback loop is what makes long-term growth accelerate.
With simple interest, you only earn on principal. With compounding, each posting period adds to the base, so the next period calculates on a larger amount.
Core formula: A = P (1 + r/n)n·t, where P is principal, r is annual rate (decimal), n is compounding periods per year, t is years, and A is the final amount.
Example: $5,000 at 5% annual interest compounded monthly for 10 years. Plug P = 5000, r = 0.05, n = 12, t = 10. The calculator handles the math and shows final balance, interest earned, and timelines.
Example with contributions: $2,000 starting, $150 monthly, 6% annual, monthly compounding over 20 years. Enter those inputs to see how recurring deposits drive the curve upward.
Use the calculator to experiment with rates, years, and contributions—small changes over long periods can noticeably shift outcomes.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Guide: The Rule of 72
The Rule of 72 estimates how many years it takes for money to double: Years ≈ 72 ÷ annual rate. It is a shortcut—use the calculator for exact projections.
- Works best for moderate rates (roughly 4–12%).
- Shows how small rate changes meaningfully shift timelines.
- Helpful for comparing scenarios before refining them in the calculator.
Enter your rate in the calculator and compare the “Years to double” output with the Rule of 72 estimate to see the difference.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Guide: Best places for cash in 2025
Where to park cash depends on your timeframe, risk tolerance, and need for liquidity. Typical options include high-yield savings, CDs, and short-term bond funds.
- High-yield savings: Flexible access, variable APYs, FDIC/NCUA protection for bank/credit union accounts.
- Certificates of deposit (CDs): Fixed term and rate, early-withdrawal penalties, tiered yields by duration.
- Short-term bond funds or T-bills: Market-driven yields and price movement; often used for slightly higher return potential with some volatility.
Use the calculator to compare different assumed rates and compounding frequencies. For cash goals under 2–3 years, prioritize stability and access over chasing higher yields.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Guide: Retirement compounding roadmap
Retirement saving benefits most from time, consistency, and realistic return assumptions. Contributions early in your career have more years to grow.
- Set a monthly contribution you can sustain and increase over time.
- Run scenarios with conservative, average, and optimistic returns to understand the range of outcomes.
- Toggle inflation to view purchasing power, and include tax estimates for a more conservative picture.
Use the calculator to model your current path vs. small contribution increases. Revisit inputs annually to stay aligned with your goals.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Guide: Debt and compounding
Compound interest can work against you on revolving debt. Higher rates and longer payoff timelines can cause balances to grow even while making payments.
- Model payoff plans by treating contributions as payments and testing higher payment amounts.
- Compare minimum payments vs. accelerated payments to see interest saved.
- Focus on highest-rate balances first when possible.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Guide: Teaching kids about compounding
Kids learn best with visuals and short stories. Show how $10 can become more over time if it earns interest and isn’t spent immediately.
- Use small, concrete amounts and short timelines to keep it relatable.
- Let them adjust the calculator sliders to see how rate and time change the curve.
- Celebrate milestones to reinforce saving habits.
Disclaimer: Educational only. Not financial advice or a guarantee of results.
Latest news & trends
Savings and CD rate moves
Banks continue to adjust APYs as central bank expectations shift. High-yield accounts remain competitive but fluctuate month to month.
Learn moreFintech automation for compounding
New tools automate round-ups, recurring deposits, and rate shopping to keep idle cash working with minimal effort.
Learn moreAdviser commentary on long-term investing
Advisers emphasize realistic return assumptions, diversification, and consistent contributions over market timing.
Learn moreInflation and retirement purchasing power
Ongoing inflation concerns keep focus on “real” returns and how rising costs affect retirement timelines.
Learn moreCompounding risks on revolving debt
Rising card and loan rates highlight how compounding can expand balances if payments lag.
Learn moreLive Compound Interest News (Auto-Updated)
Fresh headlines on compounding, savings rates, and long-term investing. Links open in new tabs.
External links are provided for convenience. No endorsement or advice is implied.