A compound interest calculator is a simple way to estimate how your money will grow if you continue saving money in savings accounts. Your money earns interest every day (if it compounds daily) and then the next day’s interest is calculated based on THAT total instead of on the principal.

Nutshell: You earn interest on top of interest. 

With the relatively low rate of return on savings accounts, it’ll take a hot minute for the growth to add up to anything earth-shattering, but, hey—a savings account beats the heck out of a coffee can full o’ crumpled cash buried in the backyard. Still, though—if you manage your money right, there’s going to come a day when it’s time to raise the bar!

As a general guideline, we suggest you start investing when you’re debt-free (other than a mortgage) and have 3–6 months of expenses saved in an emergency fund. Investing 15% of your paycheck is the sweet spot we recommend.

The reason we say that? If you look back at the historic average annual return of the stock market over a period of about 30 years, it’s around 10–12%.² Did you notice in the calculator when we said the average annual return for savings accounts is pretty regularly below 1%? That’s a big difference. 

If it’s time to move your money around, we’re not going to lie—there’s a lot to learn. As you start investing, keep this in mind: Never invest in anything you don’t understand. And that’s where it can help to talk with an investing professional about this stuff.