Compound Interest Calculator
Compound interest calculator
Compound interest is what happens when your returns start earning returns of their own. Enter a starting Principal amount, a regular monthly contribution, an illustrative annual interest rate, and a time period to see how the total could grow — and clearly see how much is your own contributions versus investment growth. This is a mathematical illustration, not a guarantee of future returns.
Understanding the inputs
Starting amount (Principal) is the money you already have to invest or save today.
Contribution each period is the amount you plan to add regularly (e.g., each month). Consistent monthly contributions are often the most powerful driver of long-term wealth, even more than the starting amount.
Annual rate of return is the interest rate you assume the money will earn. Cash in a savings account might earn 4–5%, while long-term stock market investments have historically averaged 7–10% annually (before inflation). Important: Investment returns are never guaranteed, fluctuate wildly from year to year, and can be negative.
How time multiplies growth (illustrative scenarios)
The true power of compounding reveals itself over decades, not years. In the early years, almost all the balance comes from your own contributions. By year 20 and 30, the interest earned usually eclipses the money you put in.
The table below shows the hypothetical growth of a $1,000 starting amount with $100 monthly contributions at a hypothetical 5% annual return (compounded monthly).
| Time invested | Your contributions | Interest earned | Total balance |
|---|---|---|---|
| 5 years | $7,000 | $1,084 | $8,084 |
| 10 years | $13,000 | $4,175 | $17,175 |
| 20 years | $25,000 | $18,816 | $43,816 |
| 30 years | $37,000 | $50,694 | $87,694 |
Illustrative only. Assumes a constant 5% return, no missed contributions, and no taxes, fees, or inflation. Real markets do not move in straight lines.
Project your growth
Compound interest calculator
These figures are estimates for illustration only. The calculator assumes a steady rate that never changes and a contribution added every period. Real returns rise and fall, can be negative, and are reduced by taxes, fees, and inflation. This is not a prediction and not personalized financial advice.
How this calculator works
Methodology
- Formula
- Future value = P(1 + i)N + PMT × ((1 + i)N − 1) ÷ i, where i is the rate per period (annual rate ÷ periods per year) and N is the number of periods (periods per year × years).
- Assumptions
- The rate is constant, one contribution is added each compounding period, and returns are reinvested. "Your contributions" is the starting amount plus every contribution; "growth" is the rest.
- Data sources
- The formula is the standard future-value-of-a-series calculation. For an official version, see the Investor.gov (SEC) compound interest calculator linked below.
- Limitations
- It ignores taxes, investment fees, and inflation, and it assumes a smooth rate that real markets never deliver. Use it to compare scenarios, not to predict a specific outcome.
Calculations are our own and are estimates. Real investment returns vary and can be negative; taxes, fees, and inflation all reduce what you keep. This is general education, not personalized financial advice.
A worked example
$1,000 to start, $200 a month, 7% for 10 years
Starting with $1,000 and adding $200 every month for ten years, at an assumed 7% compounded monthly, the balance grows to about $36,626.62. Of that, $25,000.00 is money you put in and $11,626.62 is growth. The longer the time frame, the larger that growth slice becomes — which is the whole point of starting early.
Frequently asked questions
What is compound interest?
It is interest earned on both your original money and the interest it has already earned. Over time that interest on interest is what makes savings and investments grow faster the longer you leave them.
What rate of return should I use?
There is no guaranteed rate. Cash savings pay less; long-run stock market returns have historically been higher but vary a lot and can be negative in any given year. Try a few rates to see a range rather than trusting a single number.
Does this calculator account for taxes, fees, or inflation?
No. It shows growth before any taxes, investment fees, or inflation, all of which reduce what you actually keep. Treat the result as a gross illustration, not a spendable figure.
Why does starting early matter so much?
Compound interest rewards time more than it rewards the size of contributions. Someone who starts at 25 and invests $200 a month until 65 will typically end up with far more than someone who starts at 35 and invests $400 a month until 65 — even though the second person contributed more total dollars. Those extra ten years let the first decade of contributions compound for much longer.
Does monthly compounding earn more than annual compounding?
Yes, but usually not by a dramatic amount. More frequent compounding (monthly instead of annually) means interest gets added to the balance more often, so each new interest payment itself starts earning interest sooner. Over long time periods this can add a few percentage points to the final balance, but the effect is smaller than changing the rate or time horizon.
Sources
- Investor.gov (U.S. Securities and Exchange Commission)Official compound interest calculator
- Federal ReserveResearch on household saving and investing