Compound Growth Calculator
Calculate compound growth over time. See how investments, savings, and businesses grow exponentially with the power of compounding.
Growth Results
Contribution Impact
Growth Comparison
Simple Growth: $0
Compound Growth: $0
Difference: $0
Power of Compounding: Extra growth from compounding
Understanding Compound Growth
Compound growth occurs when an investment earns returns on both the initial principal and the accumulated returns from previous periods. This creates exponential growth over time, often called "interest on interest."
How Compound Growth Works
The compound growth formula is:
A = P(1 + r/n)^(nt)
Where: A = final amount, P = principal, r = rate, n = compounding frequency, t = time
Simple vs. Compound Growth
| Year | Simple Growth (10%) | Compound Growth (10%) | Difference |
|---|---|---|---|
| 1 | $1,100 | $1,100 | $0 |
| 5 | $1,500 | $1,611 | $111 |
| 10 | $2,000 | $2,594 | $594 |
| 20 | $3,000 | $6,727 | $3,727 |
Compounding Frequencies
- Annual: Interest compounded once per year
- Semi-Annual: Interest compounded twice per year
- Quarterly: Interest compounded four times per year
- Monthly: Interest compounded twelve times per year
- Daily: Interest compounded 365 times per year
- Continuous: Interest compounded infinitely (theoretical maximum)
Rule of 72
The Rule of 72 is a quick way to estimate how long it takes for an investment to double at a given compound growth rate. Simply divide 72 by the annual growth rate.
Years to Double = 72 ÷ Annual Growth Rate
Example: 8% growth rate ? 72 ÷ 8 = 9 years to double
Applications of Compound Growth
- Investments: Stocks, bonds, mutual funds, retirement accounts
- Savings: High-yield savings accounts, CDs
- Business: Revenue growth, customer acquisition
- Population: Demographic studies and projections
- Technology: Moore's Law, data growth
Factors Affecting Compound Growth
- Growth Rate: Higher rates lead to faster compounding
- Time Horizon: Longer periods allow more compounding
- Compounding Frequency: More frequent compounding increases growth
- Additional Contributions: Regular additions accelerate growth
- Starting Amount: Larger initial amounts grow faster
Compound Growth in Different Markets
Compound growth rates vary significantly across different investment types and market conditions:
- Stock Market: Historical CAGR of 7-10% (1926-2023)
- Bonds: Typically 3-5% CAGR
- Real Estate: 4-8% CAGR including appreciation
- Business Revenue: Varies by industry (tech: 15-25%, stable: 3-7%)
- Savings Accounts: 1-5% CAGR depending on rates
Tip: Compound growth is the most powerful force in investing. The key to maximizing compound growth is starting early, being consistent with contributions, and staying invested for the long term. Even small differences in growth rates can lead to dramatically different outcomes over time.