Compound interest calculator
Compound interest is interest earning interest — the engine behind long-term saving and investing. Enter a starting amount, a contribution, a rate, and a time horizon to see how it grows, and exactly how much of the final balance is money you never had to deposit.
Assumes monthly compounding and a steady rate. Real investment returns vary year to year.
How to use this calculator
The starting amount is what you have today. The monthly contribution is what you'll add each month going forward — set it to zero to model a single lump sum. The annual return is your expected growth rate (historically, broad stock-market averages have landed in the high single digits before inflation, but nothing is guaranteed). The years is your time horizon. The result shows your projected balance and how much of it came from compounding rather than your own deposits.
How compound interest works
With simple interest, you earn a fixed amount on your original deposit and nothing more. With compound interest, each period's earnings are added to the balance, so the next period you earn returns on a slightly bigger pile — and the effect snowballs. For a single deposit, the future value is:
Where P is the principal, r is the annual rate (as a decimal), m is how many times per year it compounds, and t is the number of years. When you also add regular contributions, each contribution grows for however long it stays invested, and the calculator sums all of them — which is why steady monthly investing over decades can dwarf the starting amount.
A worked example
Start with $5,000, add $200 a month, assume a 7% annual return, and let it run 20 years. You personally deposit $5,000 + ($200 × 240 months) = $53,000. But the projected balance is roughly $124,000 — meaning about $71,000 came purely from compounding. The longer the horizon, the more dramatic that gap becomes; this is why starting early usually beats starting with more.
The catch worth remembering
This calculator assumes a smooth, constant return. Real markets don't move in straight lines — they rise and fall, sometimes sharply, and a bad stretch early on can dent long-term results. Inflation also erodes the buying power of the final number. Treat the projection as a way to understand the shape of compounding and to compare scenarios, not as a promise of a specific dollar amount.
Frequently asked questions
What return rate should I use?
There's no single right answer because future returns are unknown. Many people model a range — for example a conservative figure and an optimistic one — to see how sensitive the outcome is. Run the calculator a few times with different rates rather than trusting one number.
Does compounding frequency matter much?
It helps, but less than people expect. Going from annual to monthly compounding adds a little; going from monthly to daily adds very little on top of that. The two factors that dominate are time and contribution size, not how often interest is credited.
Why does starting early matter so much?
Because the earliest dollars compound for the longest. A dollar invested at 25 has decades to grow; the same dollar invested at 45 has far fewer compounding periods. That's why even small early contributions often outperform larger contributions made later.