Finance

Compound Interest Calculator

See how your money grows when interest earns interest. Add monthly contributions to project your wealth over time.

Initial deposit

Monthly contribution

Annual interest rate (%)

Investment period (years)

Compounding frequency

Monthly Quarterly Annual

Future balance

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Fill in the form to see how your money grows.

What is compound interest?

Compound interest is the interest you earn on your interest. Each period, the rate is applied to the new, larger balance — so growth accelerates over time. Albert Einstein supposedly called it the eighth wonder of the world; whether or not he did, the math is undeniable: a long horizon plus a reasonable rate produces returns that linear thinking can't predict.

Compound vs simple interest

Simple interest is calculated only on the original principal — it grows in a straight line. Compound interest curves upward because each new interest payment becomes part of the base for the next one. Over 30+ years the gap between the two is enormous, which is why compounding is the engine behind every retirement plan.

How to use it

Five inputs and you have a long-term projection.

Enter your initial deposit — the amount you invest today.
Enter the monthly contribution you plan to add (set to 0 if you only want to project a lump sum).
Enter a realistic annual interest rate. Long-term stock market averages run roughly 6–10% before inflation; bonds and savings accounts sit lower.
Enter the investment period in years and pick the compounding frequency. The more often interest compounds, the slightly higher the final balance.

The formula

The future value combines two pieces: the initial principal compounding on its own, plus the future value of an ordinary annuity for the regular monthly contributions.

FV = P (1 + r/n)^n·t + PMT × [ ((1 + r/n)^n·t − 1) / (r/n) ]

P — initial principal.
PMT — recurring contribution per period.
r — annual interest rate (decimal).
n — number of compounding periods per year.
t — number of years.

How compounding frequency affects the result

Same scenario ($10,000 at 8% APR for 20 years, no contributions). The more often interest compounds, the higher the final balance — but the gain shrinks fast after monthly.

Frequency	Periods/year	Final balance
Annual	1	$46,610
Quarterly	4	$48,754
Monthly	12	$49,268

Beyond monthly, the curve is essentially flat — daily and continuous compounding barely add anything for typical retail investors.

Frequently asked questions

What's the difference between APR and APY?

APR is the nominal annual rate without compounding. APY (or AER) factors compounding in. If a savings account quotes 5% APR compounded monthly, the APY is slightly higher: about 5.12%. This calculator uses the rate you enter as the nominal APR.

Should I worry about taxes and inflation?

For a quick projection, no. For real planning, yes. Taxes on interest or dividends drag returns down each year; inflation eats away purchasing power. To see the result in today's money, lower the rate by your expected inflation (e.g. enter 5% instead of 8%).

How realistic is an 8% annual return?

It's roughly the long-term average of broad US equity indices, before inflation and fees. Year-to-year returns swing wildly — including losing years — and past performance never guarantees future results. Use conservative numbers when planning.

Why are monthly contributions so powerful?

They give compounding more fuel. Every dollar you add starts earning returns for the rest of the period; over decades, those small monthly amounts often outweigh the original deposit. It's also the easiest way to invest consistently regardless of market timing.

What if I can't invest the same amount every month?

Use an average. Project with what you realistically expect to put in on a typical month. The exact pattern matters less than starting early and being consistent — every additional year of growth is more valuable than slightly larger contributions later.

Is compound interest only for investments?

No. It cuts both ways: credit card debt compounds against you, often at 20%+. The same math that builds wealth when you invest destroys it when you carry high-interest debt. Pay that off before chasing investment returns.

Compound Interest Calculator