How to use the compound interest calculator
- Enter your initial deposit — money you invest today.
- Add a monthly contribution. Even small, regular amounts matter more than you'd expect.
- Set an annual return. Broad stock indexes have historically returned more than savings accounts, but with larger swings; savings accounts are lower but steadier.
- Choose the number of years and the compounding frequency.
- Open the year-by-year schedule or download a CSV to keep your plan.
The formula
A = P(1 + r/n)^(n·t) + PMT × [((1 + r/n)^(n·t) − 1) / (r/n)]
P is the starting principal, r the annual rate, n compounding periods per year, t years and PMT the regular contribution. Our engine converts the rate into an equivalent monthly rate so monthly deposits line up exactly with any compounding frequency.
Worked example
Start with 10,000, add 500 a month at 7% for 20 years. You contribute 130,000 in total; the account grows to roughly 2.9 times that. Over half the ending balance is growth — which is why starting five years earlier often beats saving more later.
Tips from the numbers
- Time beats amount: the last decade of a long plan usually produces more growth than the first two combined.
- Fees compound too. A 1% annual fee can consume a large share of long-run growth — compare low-cost options.
- Use the inflation calculator to see what your future balance buys in today's money.
- Use the Rule of 72 for a quick check: 72 ÷ return ≈ years to double.
Watch: learn the concept
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal. Compound interest is paid on the principal plus all interest already earned, so growth accelerates over time.
Does compounding frequency matter much?
A little. Moving from yearly to monthly compounding raises the effective yield slightly; moving from monthly to daily changes it only marginally. Rate and time matter far more.
What return should I assume?
Use a conservative figure that matches what you actually hold — a savings account rate for cash, a lower-than-historical figure for diversified stock funds. Try several to see a range.
Are these results guaranteed?
No. Investment returns vary year to year and can be negative. Treat the output as an educational projection, not a promise.