Compound interest calculator
How much could your money grow to in 10, 20 or 30 years if you start investing today?
- Formula explained step by step
- Worked examples with real figures
- 100% local math — nothing is uploaded
Compound interest calculator
Enter your numbers and press Calculate
How to use the compound interest calculator
The calculator has four fields and updates the result instantly:
1. Initial deposit: the money you start with. If you are starting from scratch, enter 0. 2. Monthly contribution: what you will add every month. It can also be 0 if you just want to watch a lump sum grow. 3. Annual interest rate (%): the estimated nominal annual return. For a broad U.S. stock index fund, planners often model 6–8% nominal; a high-yield savings account currently pays closer to 4%. 4. Number of years: your investment horizon, from 1 to 60 years.
You get three results: the final balance (principal plus interest), the total contributed (your initial deposit plus every monthly payment) and the total interest earned (the difference between the two). Interest compounds monthly and contributions are credited at the end of each month, which is the standard convention for recurring savings plans.
Compound interest formula with monthly contributions
The future value combines two components: the growth of the initial deposit and the growth of the recurring contributions.
Plain-text formula:
FV = P × (1 + r)^n + A × ((1 + r)^n − 1) / r
where:
- P = initial deposit
- A = monthly contribution
- r = monthly rate = annual rate / 12 / 100
- n = number of months = years × 12
If r = 0, the future value is simply P + A × n.
Worked example: P = $5,000, A = $250, annual rate = 7%, term = 20 years.
1. r = 7 / 100 / 12 = 0.00583333 2. n = 20 × 12 = 240 months 3. (1 + r)^240 = 4.03873885 4. Growth of the initial deposit: 5,000 × 4.03873885 = $20,193.69 5. Growth of the contributions: 250 × (4.03873885 − 1) / 0.00583333 = $130,231.66 6. Final balance: 20,193.69 + 130,231.66 = $150,425.36
Total contributed: 5,000 + 250 × 240 = $65,000. Total interest earned: 150,425.36 − 65,000 = $85,425.36.
Examples: time matters more than the amount
The table below shows the same savings plan ($5,000 starting deposit at 7% per year) over different horizons and contribution levels. Notice how interest explodes in the later years: between year 20 and year 30 the interest nearly triples without adding a single extra dollar per month.
| Initial deposit | Monthly contribution | Annual rate | Years | Final balance | Interest earned |
|---|---|---|---|---|---|
| $5,000 | $250 | 7% | 10 | $53,319.51 | $18,319.51 |
| $5,000 | $250 | 7% | 20 | $150,425.36 | $85,425.36 |
| $5,000 | $250 | 7% | 30 | $345,575.24 | $250,575.24 |
| $10,000 | $500 | 7% | 20 | $300,850.72 | $170,850.72 |
Two practical takeaways: over 30 years the interest ($250,575) dwarfs everything you put in ($95,000); and doubling both the deposit and the contribution over 20 years (last row) doubles the result — but it still earns far less than simply leaving the smaller plan running for 10 more years. Starting early beats contributing more.
Common mistakes when calculating compound interest
These are the mistakes that distort results the most:
- Mixing up annual and monthly rates. The calculator asks for the annual rate and divides it by 12 internally. If you enter a monthly rate as if it were annual, the result will come out far too low.
- Using the gross return. Fund fees (around 0.03–0.2% for cheap index funds, over 1% for many actively managed funds) and taxes on gains reduce your effective return. Enter a realistic net rate.
- Ignoring inflation. $345,575 in 30 years will not buy what it buys today. To think in purchasing power, use an approximate real rate: nominal return minus expected inflation — many U.S. planners model 7% nominal and roughly 4–5% real for stocks.
- Assuming a constant return. Markets do not deliver the same number every year; the rate you enter is an average. Bad years early or late in the period change the actual outcome (sequence-of-returns risk).
- Forgetting that 0% means no magic. If the rate is 0%, the final balance is just the sum of your deposits: compounding needs a positive rate and time to work.
This tool is for educational purposes only; it is not financial advice or an investment recommendation.
About this calculator
Compound interest means your earnings generate earnings of their own, and the snowball gets bigger every year. This calculator estimates the future value of an investment that combines a lump sum with recurring monthly contributions — the same pattern as adding to a 401(k) or buying into an index fund every payday. Enter your starting deposit, your monthly contribution, the expected annual return and the number of years. You will get the final balance, the total you put in out of pocket, and the interest earned on top. For example, $5,000 plus $250 a month at a 7% annual return grows to $150,425.36 in 20 years — more than $85,000 of that is pure interest.
Frequently asked questions
What is the difference between simple and compound interest?
With simple interest, interest is always calculated on the original principal: $10,000 at 5% earns $500 every year, period. With compound interest, the interest is added to the balance and earns interest itself: year one produces $500, but year two is calculated on $10,500, and so on. Over 30 years the gap between the two becomes enormous.
What annual interest rate should I enter?
It depends on the product. As a rough U.S. reference: a high-yield savings account pays around 4%; the S&P 500 has averaged roughly 10% nominal per year over long periods, with no guarantee it repeats. A prudent approach is to use a fee-adjusted net rate and test several scenarios, for example 4%, 6% and 8%.
Does the calculator account for inflation and taxes?
No. The result is nominal and pre-tax. To approximate inflation, subtract expected inflation from your return (for example, 7% nominal with 3% inflation ≈ 4% real) and enter that real rate instead. For taxes, remember that outside tax-advantaged accounts like a 401(k) or Roth IRA, capital gains and interest are taxable, so your spendable amount will be lower than the balance shown.
How often does this calculator compound interest?
Compounding is monthly: the annual rate is divided by 12 and interest is credited every month, in step with the contributions. That is the most realistic convention for recurring savings plans. Compared with annual compounding, monthly compounding yields a slightly higher result at the same nominal rate; the gap is usually a few tenths of a percentage point per year.