See how savings or investments grow when interest earns interest. Enter your starting amount, rate, time and any monthly contribution to see the future value and how much growth came from interest.
Compound Interest Calculator
How the Compound Interest Calculator Works
This calculator shows how savings grow when interest is earned not just on your original deposit, but on all the interest earned before. That reinvestment — compounding — is the engine behind long-term wealth building, and it is why starting early matters so much. Enter a starting amount, regular contributions, an annual rate, and a time period to see the final balance and how much of it is growth.
The core formula is A = P(1 + r)^n, where P is the principal, r is the annual rate as a decimal, n is the number of years, and A is the final amount. With monthly contributions, the calculator applies the same compounding to each contribution, depending on how long it has to grow. The result splits into total contributions and interest earned, so you can see how much of the final value is money you put in versus money the interest created.
The model assumes a fixed annual rate and contributions made monthly. Set the Compounds per year field: 1 for yearly, 4 for quarterly, 12 for monthly (the preset value), or 365 for daily. Real investments vary year to year, but the model captures the essential shape of growth — slow at first, then accelerating as the balance grows.
How to Use This Calculator
- Enter the initial deposit.
- Enter the monthly contribution, if any.
- Enter the annual interest rate.
- Enter the number of years.
- Press Calculate and compare the final balance, total contributions, and interest earned.
Example
Deposit $5,000, add $100 a month, and earn 6% a year for 20 years. The final balance is $59,336.10. You contributed $29,000 in total, so $30,336.10 is interest — more than you put in.
Without the monthly contributions, the same $5,000 at 6% for 20 years grows to just $16,035.68. The monthly $100 — $24,000 over the period — added more than $43,000 to the final balance, because each contribution compounded for years.
What Affects the Result
- Interest rate — the most powerful input over long periods; a small rate difference compounds into a large gap.
- Time — compounding accelerates with time, so the later years add the most growth.
- Monthly contributions — regular additions give compounding more material to work with.
- Starting amount — a larger starting balance means more interest from the very first year.
- Practical tip — reinvest any interest or dividends rather than withdrawing them, so compounding keeps working.
The power of compounding is easiest to grasp by comparing two savers who do everything the same except start at different ages. Both invest $200 a month at 7%. The one who starts at 25 and stops at 65 ends with $525,692.76. The one who starts at 35 and also stops at 65 ends with $243,994.31 — less than half, despite contributing for 30 years instead of 40. The ten extra years at the start are worth more than ten extra years at the end, because early money compounds the longest. This is the single most important lesson of compound interest, and it is why financial advisers repeat “start early” so often: time in the market beats timing the market, and it beats larger contributions made later.
Compounding frequency also matters, though less dramatically. Set the Compounds per year field: 1 for yearly, 4 for quarterly, 12 for monthly (the preset value), or 365 for daily. More frequent compounding gives slightly higher results — for example, $10,000 at 6% for 10 years becomes $17,908.48 with annual compounding but $18,193.97 with monthly compounding. The difference is real but modest compared with the effects of rate, time, and contributions.
Compound Interest Calculator FAQs
What is compound interest?
Interest earned on both the original amount and on all interest earned previously. Unlike simple interest, which stays flat, compound interest grows faster over time because the balance it is calculated on keeps increasing.
How is it different from simple interest?
Simple interest is calculated only on the principal, so it adds the same amount every year. Compound interest is calculated on the growing balance, so the amount added each year increases. Over decades the difference is enormous.
Does the frequency of compounding matter?
Yes, but modestly. More frequent compounding — monthly instead of annually — gives slightly higher returns, because interest starts earning interest sooner. The difference is small compared with the effects of rate and time.
What rate should I use?
It depends on the investment. Savings accounts might pay 3–5%, while diversified stock investments have historically averaged 7–10% over long periods. Use a conservative rate for planning.
Can compounding work against me?
Yes — on debts. Credit card interest compounds against the borrower, which is why card balances grow so fast when only minimum payments are made. The same maths that builds wealth can build debt.
Related calculators: Interest Calculator, Loan Calculator, Salary Calculator.