Nerdwallet Calculator

Compound Interest & Wealth Growth Calculator

Estimated Future Results

Total Savings Balance

Total Interest Earned

Total Principal Contributed

Monthly Interest (Final Year)

function calculateWealthGrowth() { var p = parseFloat(document.getElementById('nw_initial_balance').value); var pmt = parseFloat(document.getElementById('nw_monthly_deposit').value); var r = parseFloat(document.getElementById('nw_return_rate').value) / 100; var t = parseFloat(document.getElementById('nw_years').value); if (isNaN(p) || isNaN(pmt) || isNaN(r) || isNaN(t)) { alert("Please enter valid numerical values."); return; } var n = 12; // Compounded monthly var rate_per_period = r / n; var total_periods = t * n; // Future Value of Principal: P(1 + r/n)^(nt) var fv_principal = p * Math.pow((1 + rate_per_period), total_periods); // Future Value of Monthly Contributions: PMT * [((1 + r/n)^(nt) – 1) / (r/n)] var fv_annuity = 0; if (rate_per_period > 0) { fv_annuity = pmt * ((Math.pow((1 + rate_per_period), total_periods) – 1) / rate_per_period); } else { fv_annuity = pmt * total_periods; } var total_balance = fv_principal + fv_annuity; var total_invested = p + (pmt * total_periods); var total_interest = total_balance – total_invested; var monthly_yield = (total_balance * rate_per_period); document.getElementById('res_total_balance').innerText = '$' + total_balance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_total_interest').innerText = '$' + total_interest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_total_principal').innerText = '$' + total_invested.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res_monthly_yield').innerText = '$' + monthly_yield.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('nw_result_area').style.display = 'block'; }

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How the Wealth Growth Calculator Works

Building wealth isn't just about how much you earn, but how much you save and how long that money is allowed to work for you. This calculator simulates the power of compound interest, which Albert Einstein famously called the "eighth wonder of the world."

The Mechanics of Compounding

Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated on the principal plus all of the accumulated interest from previous periods. This creates a "snowball effect" where your money grows at an accelerating rate over time.

• Initial Balance: This is your starting point—the seed money you have today.
• Monthly Contribution: Regular additions to your account. Even small, consistent contributions significantly boost the final result due to the extra time they spend compounding.
• Annual Return Rate: The percentage your investment grows each year. For context, the historical average for the S&P 500 is approximately 10% (before inflation), while high-yield savings accounts might offer 4-5%.
• Time Horizon: The most critical factor. The longer your money stays invested, the more powerful the compounding effect becomes.

Example Scenario

Imagine you start with $5,000 and contribute $300 per month. If you achieve an average annual return of 8% for 25 years:

1. Your total contributions would be $95,000.
2. Your total balance would grow to approximately $308,000.
3. In this case, over $213,000 of your final balance is pure interest—money your money earned for you.

Why Use This Calculator?

Using a wealth growth tool helps you visualize the "cost of waiting." Delaying your savings journey by just five years can result in hundreds of thousands of dollars in lost growth potential. This tool provides a clear roadmap for retirement planning, education savings, or general wealth building by showing exactly how your habits today translate into financial freedom tomorrow.