How to use the compound interest calculator
Enter your starting balance, the amount you plan to add every month, the expected annual rate of return and the number of years you will let the money grow. Pick how often interest is compounded – banks commonly compound daily or monthly, while many bonds pay semi-annually. The calculator shows the projected future value, how much of it came from your own deposits and how much is pure interest. A year-by-year table lets you follow the snowball effect.
The compound interest formula
For a single deposit with no additions, the classic formula is:
where P is the starting amount, r the annual rate, n the number of compounding periods per year and t the number of years. Because this tool also handles monthly deposits, it converts the rate into an equivalent monthly rate and steps through every month, adding interest and then your contribution. That makes it accurate for any compounding frequency.
Why time matters more than anything
Compounding is slow at first and dramatic later. In the early years, most of the balance is money you put in. After a decade or two, the interest earned each year can exceed your contributions. Starting five years earlier often matters more than investing a little more each month. The "rule of 72" in the results gives a quick estimate of how long it takes to double your money: divide 72 by the interest rate.
APY versus APR
The annual percentage yield (APY) shows the real one-year growth after compounding. A 5% rate compounded monthly gives an APY of about 5.12%. When comparing savings accounts, compare APYs.
Investment returns are not guaranteed. Use a conservative rate and remember that inflation and taxes reduce real gains.
Worked example
Suppose you invest $10,000 at 7% a year, compounded monthly, and add $200 at the end of every month for 20 years. You contribute $58,000 in total, yet the balance grows to roughly $144,600 – meaning more than $86,000 comes purely from interest earned on interest. Stop the monthly deposits and the same $10,000 still grows to about $40,000. Double the period to 40 years and the result becomes several times larger, which shows why starting early is the most powerful lever you have.
Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both your original deposit and the interest already earned. Over time it produces exponential rather than straight-line growth.
Does compounding frequency make a big difference?
It helps, but less than people think. Moving from yearly to monthly compounding adds a small amount; the rate, the time invested and your contributions matter far more.
When are the monthly contributions added?
At the end of each month, after that month’s interest is credited. This is a common, slightly conservative assumption.
What rate should I use for stock investments?
Long-run stock market averages have been around 7–10% a year before inflation, but returns vary widely. Many planners use 5–7% for a cautious projection.
Last reviewed 2026-10-27. This compound interest calculator is provided for general information; verify important decisions with a qualified professional.