Compound Interest Comparator
Side-by-side future value of multiple scenarios — monthly vs annual, tax-deferred vs taxable.
How It Works
The Compound Interest Comparator lets you model multiple investment scenarios side by side. Configure different principals, monthly contributions, interest rates, compounding frequencies, and tax treatments. The tool instantly computes the future value of each scenario so you can see exactly how each variable impacts your long-term returns.
Compound interest is the eighth wonder of the world according to Einstein — and this tool makes it tangible. See how daily compounding beats monthly, how tax-deferred accounts outperform taxable ones, and how small increases in monthly contributions compound into massive differences over decades.
FAQ
What is compound interest?
Compound interest is interest earned on both your original principal and previously accumulated interest. Over time, this creates exponential growth — your money makes money on the money it already made.
Why does compounding frequency matter?
The more frequently interest compounds, the faster your money grows. Daily compounding yields slightly more than monthly, which yields more than annual. The difference is small in the short term but substantial over decades.
Tax-deferred vs taxable — which is better?
Tax-deferred accounts let your money compound without annual tax drag. Taxable accounts lose a portion of gains to taxes each year, reducing the compounding effect. The longer the time horizon, the bigger the advantage of tax deferral.
How much should I contribute monthly?
Even small monthly contributions add up dramatically over time. $500/month at 7% for 30 years becomes over $600,000. Use this tool to find the sweet spot for your budget.
Can I compare more than 2 scenarios?
Yes. Add up to 4 scenarios to compare different strategies side by side. Each scenario has independent settings for principal, contributions, rate, frequency, and tax treatment.
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