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Compound Interest Calculator

Calculate the power of compound interest with regular contributions. See how your money grows over time with detailed projections and visualizations.
Decision Context
Page-specific guidance for using this result in a real planning decision.

This calculator is built to show how starting balance, contribution rate, time horizon, and compounding frequency combine to create long-term growth.

Use it for retirement planning, education funding, wealth-building targets, or to compare how much monthly saving matters relative to rate of return.

The most important output is not just ending balance but the split between contributions and growth, because that shows whether the plan relies on discipline, time, or return assumptions.

Methodology, assumptions, and limitations

The future value combines the initial principal, periodic compounding, and recurring contributions. Contributions and investment growth are shown separately so users can see whether the outcome depends mainly on deposits, time, or the assumed return.

Assumptions
  • The rate and contribution remain constant.
  • Interest is reinvested at each compounding interval.
  • Contributions occur at the timing selected by the calculator.
Limitations
  • Actual investment returns vary and can be negative.
  • Taxes, fees, and inflation are excluded unless entered.
  • More frequent compounding has less effect than the same increase in the stated annual return.

Sources and standards

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Analysis
Interpretation of the current calculator output

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How to Use

Step-by-step instructions
  1. 1Enter your initial investment amount (principal)
  2. 2Set your monthly contribution amount
  3. 3Input the annual interest rate you expect to earn
  4. 4Choose the investment time period in years
  5. 5Select how often interest is compounded
  6. 6Review your results and projected growth

Compound Interest Formula

This formula calculates the future value of an investment with compound interest and regular contributions.
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]

Variables:

AFuture value of the investment
PPrincipal amount (initial investment)
rAnnual interest rate (as decimal)
nNumber of times interest is compounded per year
tTime in years
PMTRegular payment amount

Example

Calculating Compound Interest with Monthly Contributions

Inputs:

Initial Investment:$10,000
Monthly Contribution:$500
Annual Interest Rate:7%
Investment Period:10 years
Compounding Frequency:Monthly

Steps:

  1. 1.Calculate periodic rate: 7% ÷ 12 = 0.583% per month
  2. 2.Calculate total periods: 10 years × 12 = 120 months
  3. 3.Future value of principal: $10,000 × (1.00583)^120 = $20,096.65
  4. 4.Future value of contributions: $500 × [((1.00583)^120 - 1) ÷ 0.00583] = $86,126.40
  5. 5.Total future value: $20,096.65 + $86,126.40 = $106,223.05
Result:
Total Value: $106,223.05 | Total Contributions: $70,000 | Interest Earned: $36,223.05

Frequently Asked Questions

What is compound interest?

Compound interest is interest calculated on the initial principal and the accumulated interest from previous periods. It's often called 'interest on interest' and can significantly boost your investment returns over time.

How does compounding frequency affect returns?

More frequent compounding (daily vs. annually) results in higher returns due to the 'interest on interest' effect. However, the difference becomes less significant as the frequency increases.

Should I invest a lump sum or make regular contributions?

Both strategies have benefits. Lump sum investing takes advantage of time in the market, while regular contributions (dollar-cost averaging) reduce market timing risk and can be more manageable for many investors.

What's the difference between simple and compound interest?

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any previously earned interest. Compound interest grows exponentially over time.
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Specific Guides
Focused pages for closely related calculation questions.
Compound Interest With Monthly Contributions

Model how recurring monthly deposits and compounding combine over time so you can estimate goal growth more realistically than with a lump-sum-only assumption.