Finance
Compound Interest Calculator
Project savings and investment growth with regular contributions and compounding.
Result
Enter your numbers and press Calculate to see the result.
Calculating…
How compound interest is calculated
Compound interest pays you interest on your interest. Each period, the balance earns a return, and that return is added back so the next period's interest is calculated on a larger amount. Over time this snowball effect makes the balance grow far faster than simple interest, which only ever pays on your original deposit. This calculator adds your monthly contribution to the balance as it goes, so contributions and compounding work together.
Formula
A = P(1 + r/m)^(m·t) + PMT × [((1 + i)ⁿ − 1) ÷ i]
where P is the starting amount, r the annual rate, m the number of compounding periods per year, t the number of years, PMT the recurring contribution, i the periodic rate, and n the number of contribution periods. The first term grows your initial deposit; the second grows the stream of contributions.
Worked example
$10,000 starting balance, $300 added monthly, 7% annual return, compounded monthly for 20 years:
- Total contributions: $10,000 + ($300 × 240) = $82,000
- Final balance: ≈ $196,000
- Interest earned: ≈ $114,000 — more than the money you put in.
The longer the money stays invested, the larger the interest slice becomes. Starting five years earlier often beats contributing more later, because those early deposits have the most time to compound.
Compounding frequency
Interest can be added daily, monthly, quarterly, or annually. More frequent compounding earns a little more at the same headline rate, because interest starts earning its own interest sooner. The gap is usually small — the interest rate and the length of time you stay invested matter far more than how often it compounds.
Ways to grow the balance faster
- Start early — time is the most powerful input; every extra year compounds on everything before it.
- Contribute regularly — steady monthly deposits raise the balance that earns interest.
- Reinvest returns — leaving interest and dividends in the account is what makes compounding work.
- Mind the rate — a higher return compounds faster, but higher returns usually carry more risk.
Paying off debt instead? The loan payment calculator applies the same compounding math in reverse to show what borrowing costs you.
Compound Interest Calculator — frequently asked questions
What is compound interest?
Compound interest is interest earned on both your original money and the interest it has already earned. Because each period builds on a larger balance, growth accelerates over time — unlike simple interest, which is only ever calculated on the starting amount.
How does compounding frequency affect the result?
More frequent compounding means interest is added to the balance more often, so it starts earning its own interest sooner. Daily compounding earns slightly more than annual compounding at the same rate, though the difference is small compared with the interest rate and the length of time you stay invested.
Do regular contributions really matter that much?
Yes. Adding a fixed amount every month steadily raises the balance that earns interest, so contributions and compounding reinforce each other. Over long periods, consistent monthly deposits often add more to the final balance than the starting amount does.
What interest rate should I use?
Use a rate that matches your account or investment: a savings account might return 2–5%, while a diversified stock-market portfolio has historically averaged roughly 7% a year after inflation. The rate is an assumption — real returns vary, so try a few values to see a range of outcomes.