Free calculatorMonthly compounding

Compound Interest Calculator 2026

Q: What return rate should I use in 2026?

For a high-yield savings account (HYSA): use 4.0–5.0% APY based on May 2026 rates. For long-term stock market investing: use 7% real or 10% nominal (S&P 500 / Damodaran). Don't use the recent 10-year average of 14.8% for planning. For conservative retirement planning, most advisors use 6–7% real.

Q: What is the Rule of 72?

Divide 72 by your annual interest rate to estimate years to double. At 4% APY: ~18 years. At 7% (S&P real): ~10.3 years. At 10% (S&P nominal): 7.2 years. At the FDIC national average of 0.38%: about 189 years.

See how savings grow with an initial deposit and monthly contributions. S&P 500: ~10% nominal / 7% real. HYSA: 4.0–5.0% APY (May 2026).

By Sammy S. · Founder · AuthorUpdated for 2026

~10% nominal

S&P 500 97-yr avg

4–5% APY

HYSA rates May 2026

Rule of 72

72 ÷ rate = years to 2×

Start early

10-yr delay costs 50%+

1Initial deposit

2Monthly contribution

3Rate & years

4See future value

Savings inputs

Deposit · contributions · rate · years

Monthly compound

Quick scenarios

Initial deposit

Monthly contribution

Annual rate

Years

$10,000 initial + $500/mo · 7% · 20 years

Total put in: $130,000

Future value after 20 years

$300,851

$130,000 invested · $170,851 interest

You contributed 43%Compound interest 57%

Put in

$130,000

Interest

$170,851

Multiple

2.31×

Of your final $300,851, 57% came from compound interest — every $1 you put in became $2.31 after 20 years.

Growth over 20 years — contributions vs interest

Compound Interest Guide 2026

Validated return rates, the Rule of 72, and what rate to use for your goal

S&P 500 returns by time horizon: what rate to use (1928–2026)

NYU Stern / Damodaran historical returns — the most-cited academic US equity baseline

The most common question: what return rate should I enter? The S&P 500 has returned approximately 10% nominal / 7% real annually since 1928 with dividends reinvested. Recent 10-year figures are much higher due to an extended bull market — don't use those for long-term planning.

Time Period	Nominal	Real	Context
5-year (2021–2025)	13.7%	9.2%	Includes 2022 bear market
10-year (2016–2025)	14.8–15.6%	12.0%	Extended bull market + AI surge
20-year (2006–2025)	10.8–11.0%	8.1%	Includes 2008 financial crisis
30-year (1996–2025)	10.1–10.4%	7.4%	Dot-com + GFC both included
50-year (1976–2025)	11.5–11.7%	7.6–7.8%	Four full market cycles
97-year (1928–2025)	~10.0%	~6.9%	Full Damodaran baseline

What rate to enter

7% real — retirement/long-term (accounts for inflation). 10% nominal — future dollar balance. 4–5% — HYSA / short-term. Never use 14.8–15.6% for long-term projections.

Important caveat

The S&P 500 has never delivered a negative total return over any 20-year period in history, but single years vary wildly. Some researchers project only 5–7% nominal for the next decade — use conservatively.

The Rule of 72: how long to double your money at 2026 rates

Divide 72 by your annual rate for a quick doubling estimate

Divide 72 by your annual interest rate to estimate years to double. At 0.38% (FDIC national avg) it takes 189 years. At a top HYSA (5.0%): 14.4 years. At S&P 500 nominal (10%): 7.2 years.

Annual Rate	Years to Double	What This Is
0.38%	189 yrs	FDIC national avg savings
2.0%	36 yrs	Money market / typical CDs
4.0%	18 yrs	HYSA (broad access, May 2026)
4.5%	16 yrs	Top HYSA tier (May 2026)
5.0%	14.4 yrs	Best HYSA rates (May 2026)
7.0%	10.3 yrs	S&P 500 real return (30-yr avg)
10.0%	7.2 yrs	S&P 500 nominal (97-yr avg)

Traditional savings: 189 years

At 0.38%, $10,000 grows to ~$10,388 after 10 years — barely keeping up with inflation.

HYSA: 14–18 years

At 4–5%, $10,000 doubles in 14–18 years. Best for emergency funds and goals under ~5 years.

S&P 500: 7–10 years

At 7–10%, $10,000 doubles in 7.2–10.3 years — why long-term equity investing outpaces savings accounts.

Which rate to use for your goal: HYSA vs investing vs retirement (2026)

The right rate depends on time horizon and account type

Emergency fund (1–3 years)

Use: 4.0–5.0%High-yield savings account (HYSA)

FDIC insured, liquid. Vio Bank 4.03%, Varo up to 5.00% (conditions apply). National avg only 0.38% — don't leave money in a traditional savings account.

Short-term savings (3–7 years)

Use: 4.5–5.5%CDs, I-bonds, money market

Lock in a rate with CDs if you don't need liquidity. I-bonds are inflation-indexed (check TreasuryDirect for current rate). Better certainty than equities over short horizons.

Long-term investing (10–20+ years)

Use: 7.0% real / 10% nominalIndex funds (S&P 500, total market)

Use 7% real or 10% nominal for projections. The S&P 500 has delivered 10.0% nominal over 97 years and 10.4% over 30 years. Never use the recent 10-year figure (14.8%) for planning — it includes an abnormally strong bull market.

Retirement (30+ years)

Use: 6–7% real401(k), IRA, Roth IRA

Most financial planners use 6–7% after inflation for retirement projections. 2026 401(k) limit: $23,500 (under 50), $31,000 (50+ with catch-up). Roth IRA: $7,000 / $8,000 catch-up.

The cost of starting late

Contributing $500/month from age 25 at 7% real ≈ ~$1,195,000 at 65. Starting at 35 ≈ ~$567,000. The 10-year delay costs about $628,000 — more than the $60,000 those years of contributions would add.

Rates and returns vary. For inflation or tax adjustments, try our investment calculator or retirement calculator.

The future value above comes from your initial deposit, monthly contributions, annual interest rate, and time horizon—not a third-party feed. We compound your starting balance and periodic contributions at a monthly rate derived from your annual rate. Below are the formulas, the order we follow, and worked examples you can check by hand.

Formulas

Line	Formula
Monthly rate	r = annual rate % ÷ 100 ÷ 12
Total periods	n = years × 12
Lump sum growth	FV₁ = initial deposit × (1 + r)^n
Contribution growth (ordinary annuity)	FV₂ = monthly payment × [((1 + r)^n − 1) / r]
Future value	FV₁ + FV₂
Total contributions	Initial deposit + (monthly contribution × 12 × years)
Interest earned	Future value − total contributions

Order of operations

Convert annual rate to monthly compounding

r = annual % ÷ 12; n = years × 12 months

The calculator compounds monthly (12 times per year). Your stated annual rate is divided into equal monthly periods.

Grow the initial deposit

Compound lump sum for n months at rate r

Your starting balance earns interest each month for the full horizon. This is the standard future value of a present lump sum.

Grow monthly contributions

End-of-month payments into an ordinary annuity

Each monthly contribution is assumed to be invested at month-end and compound until the end of the projection. At 0% interest, contributions simply sum with no growth.

Sum components and interest

Future value = lump sum FV + annuity FV; interest = total − principal contributed

The headline number is the sum of both growth paths. We also show how much came from the initial deposit vs. contributions, and total interest earned.

Build the yearly chart

Re-run the same math at each year boundary

Each chart point uses identical inputs with a shorter time horizon, so you can see balance, contributions, and interest accumulate year by year.

Worked example

$10,000 start · $500/mo · 7.0% annual rate · 20 years

Lump sum: $10,000 × (1 + 0.6%/mo)^240 mo = $40,387

Contributions: $500/mo ordinary annuity → $260,463

$40,387 + $260,463 = $300,851 future value

Interest earned: $300,851 − $130,000 contributed = $170,851

Line item	Amount
Initial deposit	$10,000
Monthly contribution	$500
Annual rate	7.0%
Years	20
Initial deposit grew to	$40,387
Contributions grew to	$260,463
Future value	$300,851
Total contributed	$130,000
Interest earned	$170,851

Lump sum only: Lump sum only: $10,000 invested, no monthly contributions → $40,387.

Higher savings rate: Double contributions: $1,000/mo instead of $500/mo → $561,314 (vs $300,851 at $500/mo).

Zero return: 0% rate: future value equals deposits plus all contributions → $130,000.

Constants we use

Parameter	What we use	Source
Default initial deposit	$10,000	Pre-fill on page load
Default monthly contribution	$500	Pre-fill on page load
Default annual rate	7.0%	Rate presets include 4.5%, 7%, 10%
Default horizon	20 years	Clamped to 1–50 years in the UI
Compounding frequency	Monthly (12× per year)	Fixed in this calculator
Contribution timing	End of month	Ordinary annuity convention

What we do not model on this page

We use a constant interest rate and level monthly contributions—we do not model inflation, taxes, account fees, market volatility, variable contribution schedules, or intra-month contribution timing. Compounding is monthly only on this page (not daily or quarterly). Negative rates are treated as 0% growth on contributions. Results are illustrative, not investment advice.

Official references

FAQ

Compound interest FAQ

Monthly contributions, which rate to use, Rule of 72, and real vs nominal returns.

Your initial balance earns interest each month. Each monthly contribution also earns interest from the month it's added. Interest earned in month 1 becomes part of the balance that earns interest in month 2 — growth accelerates over time. Formula: FV = P(1 + r)^n + C × [((1 + r)^n − 1) / r], where r = monthly rate, n = months, P = principal, C = monthly contribution.

For a high-yield savings account (HYSA): use 4.0–5.0% APY based on May 2026 rates. For long-term stock market investing: use 7% real or 10% nominal (S&P 500 / Damodaran). Don't use the recent 10-year average of 14.8% for planning. For conservative retirement planning, most advisors use 6–7% real.

Divide 72 by your annual interest rate to estimate years to double. At 4% APY: ~18 years. At 7% (S&P real): ~10.3 years. At 10% (S&P nominal): 7.2 years. At the FDIC national average of 0.38%: about 189 years.

Simple interest is only on principal: $1,000 at 7% for 10 years = $1,700. Compound interest includes prior interest: $1,000 at 7% for 10 years ≈ $1,967. At 30 years, simple ≈ $3,100 while compound ≈ $7,612. Most savings accounts and investments use compound interest.

At 7% annual (S&P real): $180,000 contributed grows to ~$567,000. At 10% nominal: ~$1,130,000. Starting 10 years earlier ($500/month for 40 years at 7%) ≈ $1,195,000 — illustrating why starting early matters most.

More frequent compounding produces slightly more growth. $10,000 at 5% for 20 years: annual ≈ $26,533; monthly ≈ $27,126; daily ≈ $27,182. Monthly vs daily is minimal. This calculator uses monthly compounding, the standard for most savings accounts.

Nominal is the stated rate (e.g., 10% S&P). Real adjusts for inflation (~7%). Use real returns for future spending power; use nominal to see the dollar balance your account may show. Example: $1M in 30 years at 3% inflation is worth about $412,000 in today's dollars.

Contributing $500/month from age 25 to 65 (40 years) at 7% real ≈ $1,195,000. Starting at 35 (30 years) ≈ $567,000 — a 10-year delay costs over $600,000. Maximize tax-advantaged accounts first (2026 401(k) limit $23,500 / $31,000 catch-up).