Dollar Cost Averaging & Compound Interest Calculator

Compound Interest Calculator demonstrates the most powerful force in finance: compound interest. Einstein reportedly called it the "eighth wonder of the world". Unlike simple interest (where money grows linearly), compound interest means your interest earns interest.\n\nThis tool projects how your investments (stocks, bonds, savings) will grow over 10, 20, or 30 years based on your Initial Principal, Monthly Contribution, and Annual Return Rate.

1. Investors (FIRE movement): Planning for early retirement.\n2. Students: Understanding why starting to save at 20 is better than at 30.\n3. Retirement Planners: Calculating if their nest egg will be big enough.

1. Rate of Return: Variable. S&P 500 historically returns ~10% (nominal) or ~7% (inflation-adjusted).\n2. Time Horizon: The most critical factor. The curve is exponential—most of the growth happens in the final years.\n3. Frequency: Compounding monthly vs. annually usually makes a small but positive difference.

The chart shows the gap between "Total Principal" (money you put in) and "Total Value" (money you have). Over 30 years, the "interest" portion typically becomes larger than the principal itself. This is wealth creation.

1. Start Early: Investing $100/mo starting at age 25 yields twice as much as starting at 35.\n2. Be Consistent: Automate your monthly contributions (Dollar Cost Averaging).\n3. Minimize Fees: High expense ratios eat into your compound interest. Choose low-cost index funds.