Compound Interest Calculator

How to use this calculator

1. Enter your starting amount and any monthly deposit you plan to keep up.
2. Enter the annual return you expect and how many years the money has to grow.
3. Choose how often interest compounds — monthly is typical for savings accounts.

The result splits the final balance into what you put in and what the interest added, which is the comparison that actually matters.

How the calculation works

The lump sum grows by the compound interest formula:

A = P(1 + r/n)^(nt)

where P is the principal, r the annual rate, n the compounding periods per year, and t the years.

Monthly deposits are a separate calculation, the future value of an annuity:

FV = PMT × [((1 + i)^m − 1) / i]

where m is the number of deposits. When compounding is not monthly, i is derived from the compounding rate rather than assumed equal to it — i = (1 + r/n)^(n/12) − 1. That conversion is what makes quarterly or annual compounding come out correctly alongside monthly deposits instead of being quietly approximated.

A worked example

$10,000 to start, $200 a month, 7% a year, compounded monthly, for 20 years.

Over 240 months you deposit $200 × 240 = $48,000, which with the initial $10,000 means $58,000 of your own money.

The final balance is $144,572.72.

You contributed	$58,000.00
Interest earned	$86,572.72
Final balance	$144,572.72

Interest contributed more than you did — 60 percent of the final balance was never your money. Without compounding, the same deposits at simple interest would have reached $72,000. The compounding is worth over $72,000 on its own.

Where the growth actually comes from

Compounding is unremarkable early and dramatic late. On the example above, the balance passes $25,000 in year four and $50,000 in year nine — but it adds the last $50,000 in barely four years. The curve is not steady; nearly all the visible progress happens at the end.

This is why starting early beats saving more. Someone investing $200 a month from age 25 to 35 and then stopping entirely ends up with more at 65 than someone who starts at 35 and contributes for thirty straight years. Ten years of contributions beat thirty, because they had thirty extra years to compound.

Common mistakes to avoid

Fixating on compounding frequency. It matters far less than people expect. On $10,000 at 7% for 20 years, annual compounding gives $38,697 and daily gives about $40,551 — a difference of under 5 percent across two decades. The rate and the time dominate everything else.

Using a nominal return and forgetting inflation. A 7 percent return with 3 percent inflation is roughly 4 percent in real terms. The $144,573 above would buy what about $80,000 buys today. If you want the answer in today’s money, subtract expected inflation from the rate before you enter it.

Ignoring fees. An annual fee of 1 percent sounds trivial against a 7 percent return. Over 30 years it removes roughly a quarter of the final balance, because the fee compounds too. Always enter the return net of fees when comparing funds.

Assuming a smooth return. No investment returns exactly 7 percent every year. Markets fall, sometimes for years. This calculator models an average, and the order in which good and bad years arrive matters a great deal if you are drawing money out rather than paying it in.

When this calculator is not the right tool

For a fixed-term deposit where interest does not roll up, use simple interest. For working out what monthly amount reaches a specific target by a specific date, the savings goal calculator solves the equation the other way round. And for measuring what an investment you already hold has actually returned, use the ROI calculator.