Compound Interest Calculator

Where to hold regular investments in the US

Before a taxable brokerage account, most Americans invest through workplace and retirement accounts, where the projection above isn't eroded by tax every year. The IRS limits for 2026 (IRS):

• 401(k), 403(b), most 457 plans and the TSP: up to $24,500 of your own contributions, plus an $8,000 catch-up if you're 50 or older.
• IRA: up to $7,500, plus a $1,100 catch-up at 50 or older.

Traditional accounts give you the tax break now and tax withdrawals later; Roth accounts are funded from taxed pay but qualified withdrawals are tax-free. If your employer matches 401(k) contributions, the match is an instant return on top of anything this calculator projects — usually the first money to invest.

Money in an ordinary taxable brokerage account is still worth projecting, but remember the drag: dividends are taxed each year, and gains are taxed when you sell — at lower long-term rates for investments held more than a year than for those sold sooner. Holding for longer is one of the few tax decisions entirely in your hands.

Worked example: Maxing out a 401(k)

The 2026 employee limit of $24,500 works out to about $2,042 a month. At an illustrative 6% a year for 30 years, before any employer match:

• You pay in $735,100.
• It could grow to about $1,999,600 — roughly $1,264,500 of growth on top of what you put in.

Change the amount, return or years in the calculator above to test your own version; try a lower return too, because none of these is guaranteed.

How compounding builds wealth

Returns start earning returns of their own: a lump sum grows by FV = PV × (1 + r)ⁿ, and a regular contribution by FV = P × [ ((1 + r)ⁿ − 1) / r ] × (1 + r), where each payment compounds for as long as it stays invested. The earliest contributions do most of the work, which is why starting early matters more than starting big.

Lump sum or monthly — which ends up ahead?

Switch between the two modes and the answer is consistent: for the same total contributed, a lump sum wins, because every unit of money is invested for the full horizon rather than for an average of half of it. Take $735,000 at a 6% expected return over 30 years:

• All at once — $735,000 invested on day one grows to roughly $4,222,000.
• $2,000 a month for 30 years — the same $735,000 contributed, ending at roughly $2,000,000.

A $2,223,000 gap, purely from time in the market — but the comparison is usually hypothetical. If you don't have $735,000 today, the real choice is $2,000 a month or nothing, and $2,000,000 beats nothing. Monthly investing also spreads your entry over 360 different prices instead of betting everything on one day.

Where the money to invest comes from

Start from what survives tax, not your salary. Work out your monthly take-home pay, subtract what you genuinely spend, and use what's left — the whole result depends on not stopping.

Tips and common mistakes

• Capture the full employer match first. It's money you lose if you don't contribute enough to get it.
• Model the 401(k) limit. $24,500 a year is about $2,042 a month — enter that as the monthly amount to see the ceiling of what a 401(k) can build.
• Check the fund expense ratio. Target-date and index funds inside a 401(k) charge very different fees; subtract the fee from the expected return here.
• Be realistic about returns. Model a conservative rate as well as an optimistic one — real returns vary and can be negative in any year.
• Compare it against paying down debt. The interest a loan overpayment saves is a guaranteed return, which an expected 10% is not.