Simple interest vs compound interest: what's the difference?

Simple interest = principal × rate × periods (no reinvestment). Compound interest compounds earnings on earnings: FV = principal × (1+r)^n. Over long horizons, compound interest dominates.

How do you calculate compound returns on a monthly DCA investment?

DCA (dollar-cost averaging) uses the future-value-of-annuity formula: FV = PMT × ((1+r)^n − 1) ÷ r, where PMT is the monthly contribution, r the per-period return, n the number of periods. Use the TS Tools compound calculator with monthly contributions.

How long does it take to double my money at 10% annual return?

Use the rule of 72: 72 ÷ 10 = ~7.2 years. The exact answer is ln(2)/ln(1.1) ≈ 7.27 years.

Compound Interest Calculator | Investment Growth with Contributions

Investment Parameters

Principal ($) Initial lump-sum investment

Annual Rate (%) Range 0 - 50

Years Range 1 - 60

Monthly Contribution ($) Added each month (0 = lump sum only)

Compounding Frequency How often interest is compounded

Results

Investment Growth Curve

Yearly Breakdown

Year	Contributions ($)	Balance ($)	Interest Earned ($)

How It Works

Final balance = principal grown by compound interest + future value of all monthly contributions.
Compound interest formula: A = P × (1 + r/n)^n×t, where P = principal, r = annual rate, n = compounding periods per year, t = years.
Monthly contributions use the future value of an annuity: PMT × [((1 + i)^m − 1) ÷ i], where i = periodic rate, m = number of periods.
Interest earned = Final balance − Total contributions.

Actual returns are affected by market volatility, inflation, taxes, and fees. This tool's results are for reference only and do not constitute investment advice.

📚 Compound Interest Knowledge

Time Is Your Most Powerful Ally

Compound interest rewards patience. If you invest $10,000 at 7% annual return, in 10 years it grows to ~$19,672, in 20 years to ~$38,697, and in 30 years to ~$76,123. The growth accelerates over time because each year's returns build on previous years' returns. Starting just 5 years earlier can more than double your final balance over a 30-year horizon. This is why financial advisors emphasize starting to invest early, even with small amounts.

The Rule of 72

A quick way to estimate how long it takes for your money to double: divide 72 by the annual interest rate. At 6%, money doubles in ~12 years; at 8%, ~9 years; at 10%, ~7.2 years. This rule also works for estimating the impact of inflation — at 3% inflation, prices double in ~24 years. Use the Rule of 72 for quick mental math, but use the exact compound formula for precise planning.

Lump Sum vs Dollar-Cost Averaging

Historically, investing a lump sum all at once outperforms dollar-cost averaging (investing gradually) about 60–70% of the time, because markets tend to rise over time. However, dollar-cost averaging reduces the psychological risk of investing right before a market crash. If you have a large sum to invest, consider putting 50–70% in immediately and spreading the rest over 6–12 months. The most important factor is staying invested for the long term.

💡 Tip: The biggest enemy of compound growth is selling during market downturns. A 10-year investment horizon with a diversified portfolio has historically recovered from every major market crash. Stay consistent, reinvest dividends, and avoid timing the market. This tool is for reference only and does not constitute investment advice.