Compound Interest Calculator

Example Calculation

Start with $10,000, add $500 a month, and earn 7% a year compounded monthly for 20 years.

You put in $130,000 in total. The balance grows to about $300,851, which means about $170,851 of it is interest. That is roughly 2.3 times what you contributed.

How It Works

Compound interest is interest earned on both your original principal and on the interest already added. This calculator projects the future value of an investment or savings account using your starting balance, monthly contributions, annual rate of return, time horizon and compounding frequency.

For each month in the projection, the balance first grows by the effective monthly rate and then your monthly contribution is added. The chart stacks two pieces for each year: the money you put in (contributions) and the growth your money earned (interest). Early on, contributions dominate; later, the interest slice becomes larger than anything you deposit, which is the compounding effect in action.

The compounding frequency setting controls how often interest is added: annually, semi-annually, quarterly, monthly or daily. More frequent compounding produces slightly more growth, but the difference is small compared with the effect of the rate, the time horizon and how much you contribute. Time is the most powerful input — try changing the years from 20 to 30 and watch the result more than double.

Keep in mind that real investment returns are not guaranteed or smooth, and they are reduced by fees, taxes and inflation. A 7% nominal return with 2.5% inflation is roughly a 4.5% real return. Use this calculator to explore “what if” scenarios — what if I start five years earlier, add $100 more each month, or earn 1% less — rather than as a prediction. Savings account interest rates are usually lower than long-term stock market averages, so adjust the rate to match the account you are modeling.

Formula Explained

FV = P × (1 + r/n)nt for a lump sum, where r is the annual rate, n the compounding periods per year and t the years.

With deposits, each month: balance = balance × (1 + i) + deposit, where i = (1 + r/n)n/12 − 1.

Assumptions and limits

• The rate is constant for the whole period. Real returns change from year to year and are not guaranteed.
• Deposits are made at the end of each month, after that month’s interest is added.
• The compounding setting changes how often interest is added. Deposits are still added monthly.
• Results are nominal: they are not reduced for inflation, taxes or fees.
• The monthly deposit does not change and there are no withdrawals.