Compound Interest Calculator
See how a lump sum and monthly contributions grow over time — with the exact formula behind every number.
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Updates liveEstimates only. Excludes taxes, fees, and inflation. Actual investment returns vary and are not guaranteed.
Understanding compound interest
Compound interest is often called the most powerful force in personal finance because growth builds on itself: each period, you earn interest not only on your original deposit but on all the interest you've already accumulated. Over long time horizons, this produces dramatically more growth than simple interest, even at the same stated rate.
Use this calculator to project how a lump sum, regular monthly contributions, or both, could grow over time at a given interest rate.
The compound interest formula
The growth of your starting principal follows the standard compound interest formula:
If you add monthly contributions, their growth is calculated separately using the future value of an annuity formula, then added to the result above:
What each variable means
- A — the future value of your starting principal alone.
- P — your starting principal (initial deposit).
- r — your annual interest rate, expressed as a decimal (7% becomes 0.07).
- n — the number of times interest compounds per year (12 for monthly, 365 for daily, and so on).
- t — the number of years the money grows.
- C — your monthly contribution amount.
Step-by-step: how to use this calculator
- Enter your starting principal — the amount you're depositing today.
- Enter the annual interest rate your account or investment is expected to earn.
- Set your time horizon in years.
- Choose a compounding frequency — check your account's terms, or use monthly if unsure, since it's the most common convention.
- Add a monthly contribution if you plan to keep depositing money regularly, or leave it at zero for a one-time lump sum.
Worked example
Suppose you deposit $10,000 today, add $200 per month, and earn 7% annually, compounded monthly, for 20 years.
| Component | Value |
|---|---|
| Starting principal (P) | $10,000 |
| Growth of principal alone over 20 years | $40,387 |
| Total monthly contributions (20 × 12 × $200) | $48,000 |
| Growth of contributions over 20 years | $104,185 |
| Future value | $144,573 |
| Total interest earned | $86,573 |
Try these same numbers in the calculator above to confirm the result.
Interpreting your results
The gap between your total deposited and your future value is the power of compounding at work — in the example above, contributions of $58,000 became roughly $144,500. Notice how much of the total interest comes from ongoing contributions rather than the initial deposit; this is why starting a regular savings habit early matters more than the size of your first deposit.
Common mistakes to avoid
- Assuming compounding frequency has a huge effect — in most realistic scenarios, the difference between monthly and daily compounding is small.
- Ignoring fees. Investment account fees, even small ones, compound against you the same way interest compounds for you.
- Using an overly optimistic rate for a low-risk account, or an overly conservative rate for a long-term stock investment.
- Forgetting that contributions stop producing decades of growth once you stop making them — the last few years of contributions barely have time to compound.
Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both your original principal and the interest that has already accumulated. Because each period's interest is added to the balance before the next period's interest is calculated, growth accelerates over time compared to simple interest, which only ever applies to the original amount.
How does compounding frequency affect my results?
The more frequently interest compounds, the faster your balance grows, because interest starts earning its own interest sooner. Daily compounding produces a slightly higher return than monthly compounding, which produces a higher return than annual compounding, for the same stated annual rate.
Does this calculator account for taxes or inflation?
No. This tool shows nominal growth before taxes and before adjusting for inflation. Interest earned in a standard taxable account is generally taxable in the year it is earned, and inflation reduces the real purchasing power of your future balance, so your actual spending power will be lower than the raw dollar figure shown.
How are monthly contributions calculated?
Monthly contributions are assumed to be added at the end of each month and compound monthly, using the standard future-value-of-an-annuity formula, regardless of which compounding frequency you selected for the principal. This matches how most savings accounts and investment plans handle regular deposits.
What's a realistic interest rate to use?
That depends entirely on where the money is held. A high-yield savings account might earn 3 to 5 percent, while long-term stock market averages have historically been closer to 7 to 10 percent before inflation, with meaningfully more risk and year-to-year volatility. Use a rate appropriate to your actual account type.
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Conclusion
Compound growth rewards two things above all: time and consistency. A modest monthly contribution started early will typically outgrow a much larger lump sum started late. Use this calculator to test different rates, timeframes, and contribution amounts before committing to a savings or investment plan.