Compound Interest Calculator
Project how your money grows with compound interest, regular monthly contributions and any compounding frequency.
Compound Interest Calculator — input your values
What does this financial calculator do?
The compound interest calculator projects how an initial amount grows when earned interest is added back to the balance and earns interest itself. You choose the annual rate, the compounding frequency (daily to annually) and the time period, and add an optional monthly contribution.
You see the final balance, the total you contributed yourself, the interest earned, and a year-by-year growth chart that makes the compounding snowball visible. This is the standard way to model savings accounts, index funds and retirement accounts.
Formula and variables
With compounding, interest earns interest — the earlier and longer you invest, the larger the effect.
| Symbol | Meaning |
|---|---|
| A | Final amount |
| P | Initial principal |
| r | Annual interest rate (decimal) |
| n | Compounding periods per year |
| t | Time in years |
| M | Contribution per period |
Worked example
You invest $10,000 at 7% compounded monthly for 10 years and add $100 each month.
- Monthly compounding: n = 12.
- Effective monthly rate ≈ 0.5654%.
- After 120 monthly steps the balance reaches ≈ $35,690.
- Contributions total $10,000 + $12,000 = $22,000.
- Interest earned ≈ $13,690.
Answer: Final balance ≈ $35,690, with about $13,690 earned as compound interest.
Tips and common mistakes
Tips
- Start early: doubling the time horizon multiplies the final balance far more than doubling the monthly contribution.
- Use a realistic long-run rate (6% to 8%) rather than a best-case one when planning.
- More frequent compounding helps slightly, but the contribution size and time matter far more.
- Reinvest dividends and interest to keep the compounding snowball rolling.
Common mistakes to avoid
- Treating a nominal rate as if it were already the annual growth rate after compounding fees and taxes.
- Forgetting to include ongoing contributions, which usually outweigh the initial lump sum over long horizons.
- Comparing balances without using the same rate, contributions and time period.
Compound Interest Calculator — frequently asked questions
What is compound interest?
Compound interest is interest earned on both the original principal and on interest that has already been added to the balance. Over time the balance grows exponentially rather than linearly.
What is the rule of 72?
Divide 72 by the annual rate to estimate how many years it takes money to double. At 7%, money doubles roughly every 72 ÷ 7 ≈ 10.3 years.
Does compounding frequency matter much?
At the same nominal rate, more frequent compounding yields a slightly higher effective return. For example, daily compounding beats annual compounding, but the difference is usually small over short terms.
Should I invest a lump sum or contribute monthly?
Both work well. Contributions build the habit and average out market timing, while an earlier lump sum has longer to compound. The best plan is usually a combination.
Is the return guaranteed?
No — accounts and investments carry different risks and returns are not guaranteed. This calculator shows what the balance would be if the rate held constant, which real markets rarely do.
How are taxes on the interest handled?
This calculator ignores taxes, which vary by account type and jurisdiction. Tax-advantaged accounts like IRAs and 401(k)s postpone or avoid tax on growth entirely.