What is compound interest?

Compound interest is interest calculated on both your original principal and all the interest that's already accumulated, rather than on the principal alone. This is what makes a balance grow faster and faster over time, compared to simple interest, which only ever applies to the original amount.

What's the formula for compound interest?

The standard formula is A = P(1 + r/n)^(nt), where A is the future value, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the time in years. This calculator uses that formula, extended to also handle regular monthly contributions.

How does compounding frequency affect my return?

More frequent compounding grows a balance slightly faster at the same nominal annual rate, since interest starts earning its own interest sooner. The difference between annual and daily compounding is real but modest at typical rates — the length of time invested and the rate itself matter far more than compounding frequency.

Does adding monthly contributions really make a big difference?

Yes, often a larger difference than people expect, because each contribution also compounds for the remaining time it's invested. A contribution made in year 1 grows for the entire investment period, while one made in the final year barely compounds at all — which is why starting contributions early matters more than the contribution size alone.

What is the Rule of 72?

The Rule of 72 is a quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes an investment to double. At 7% annual growth, 72 ÷ 7 ≈ 10.3 years to double — a useful sanity check, though the calculator's actual formula is more precise.

Is this the same as how a savings account or investment account grows?

It models the same mathematical principle used by savings accounts, CDs, and (as a simplification) long-term investment accounts, though real investments like stocks and index funds don't grow at a smooth, fixed rate — actual returns vary year to year. This calculator is best used to model a steady assumed average return, not to predict exact investment performance.

Why does starting early matter more than contributing more later?

Because time is the multiplier in compound growth — money invested early has more compounding periods working on it. A smaller amount invested for a much longer time can outgrow a much larger amount invested for a shorter time, even if the shorter-time investor contributes far more money in total.

Does this calculator account for taxes or inflation?

No. It shows nominal (before-tax, before-inflation) future value based on the interest rate you enter. Taxable accounts reduce real returns through taxes on interest or capital gains, and inflation reduces the real purchasing power of any future balance — both are worth considering separately.

Can I use this to model a loan instead of an investment?

This calculator models growth from a lump sum plus contributions, which fits savings and investment scenarios. For a loan you're paying down, use our Mortgage & Loan Calculator or Auto Loan Calculator instead — those model a shrinking balance with fixed payments, which is a different calculation.

Is my data stored anywhere?

No. All calculations run locally in your browser. Nothing you enter is transmitted to a server or stored.

Compound Interest Calculator

Calculate the future value of an investment from a principal, interest rate, compounding frequency, time, and optional monthly contributions.

Last updated July 31, 2026

Initial principal ($)

Annual interest rate (%)

Compounding frequency

Time (years)

Additional monthly contribution ($, optional)

Future value

$144,572.72

$86,572.72 in interest earned

Total contributions

$58,000.00

Total interest earned

$86,572.72

Year-by-year growth

Year	Balance	Total contributed
1	$13,201.42	$12,400.00
2	$16,634.27	$14,800.00
3	$20,315.28	$17,200.00
4	$24,262.39	$19,600.00
5	$28,494.83	$22,000.00
6	$33,033.24	$24,400.00
7	$37,899.74	$26,800.00
8	$43,118.03	$29,200.00
9	$48,713.55	$31,600.00
10	$54,713.58	$34,000.00
11	$61,147.34	$36,400.00
12	$68,046.20	$38,800.00
13	$75,443.79	$41,200.00
14	$83,376.14	$43,600.00
15	$91,881.93	$46,000.00
16	$101,002.60	$48,400.00
17	$110,782.60	$50,800.00
18	$121,269.60	$53,200.00
19	$132,514.70	$55,600.00
20	$144,572.72	$58,000.00

How to use the compound interest calculator

1
Enter your initial principal and expected annual interest rate.
2
Choose a compounding frequency (annually, semiannually, quarterly, monthly, or daily) and a time period in years.
3
Optionally add an additional monthly contribution you plan to keep making.
4
Your future value, total contributions, total interest earned, and a year-by-year growth table update instantly.

The compound interest formula, explained

A compounding balance grows faster each year, since interest is earned on both the principal and all prior interest.

Formula: A = P(1 + r/n)^nt, where A is the future value, P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years.

Worked example: $10,000 invested at 7% annual interest, compounded annually, for 20 years, with no further contributions: A = 10,000 × (1 + 0.07)²⁰ = $38,696.84 — earning $28,696.84 in interest on a $10,000 principal.

Why compound beats simple interest: simple interest on the same $10,000 at 7% for 20 years would only reach $10,000 + (10,000 × 0.07 × 20) = $24,000 — over $14,600 less than the compound result, because simple interest never earns interest on its own interest.

Adding monthly contributions: the same $10,000 principal at 7%, compounded monthly, plus $200 contributed every month for 20 years, grows to $144,572.72 — of which $58,000 came from contributions (principal + deposits) and $86,572.72 was interest earned.

How compounding frequency changes your return

Compounding frequency	$10,000 at 7% for 20 years
Annually	$38,696.84
Monthly	$40,387.39
Daily	$40,546.56

Switching from annual to daily compounding adds about $1,850 over 20 years on this example — a real but modest difference compared to the effect of the interest rate itself or the length of time invested.

Why starting early beats contributing more

Because compound growth accelerates the longer money stays invested, an early start can outperform a much larger total contribution made later — this is one of the most counter intuitive and important lessons in personal finance.

Worked example: at 7% annual growth, compounded monthly:

Person A contributes $300/month for 10 years (ages 25-35), then stops entirely and lets the balance grow untouched for 30 more years. Total contributed: $36,000. Final balance at age 65: $421,452.72.
Person B waits until age 35 and contributes the same $300/month continuously for 30 years (ages 35-65). Total contributed: $108,000 — three times as much as Person A. Final balance at age 65: $365,991.30.

Despite contributing $72,000 less in total, Person A ends up with about $55,000 more — purely from the extra 10 years those early contributions had to compound. This is the core argument for starting retirement or investment contributions as early as possible, even in small amounts.

Model your own timeline in the calculator above, or compare it against paying down debt instead with our Mortgage & Loan Calculator. If you're specifically modeling a 401(k) or retirement account with an employer match, use the Retirement / 401(k) / Savings Goal Calculator instead — it extends this same compounding math to include contribution and match modeling. And if you're carrying high-interest debt, our Debt Payoff Calculator usually shows a faster path to building wealth than investing while balances are still accruing double-digit interest.

Need the non-compounding version for a short-term loan or bond? Our Simple Interest Calculator → calculates interest on the original principal only.

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