Compound Interest Calculator

Compound interest is interest earned on interest — the engine behind every long-term investment and every growing debt. This calculator projects how an initial sum plus regular monthly contributions grows at a given annual return, with monthly, quarterly or yearly compounding.

The most important lesson it teaches: time matters more than amount. Starting ten years earlier usually beats doubling the contribution.

Enter valid values to see the results.

Formula

FV = P(1 + r/n)ⁿᵗ + PMT × [((1 + r/n)ⁿᵗ − 1) / (r/n)]

P is the initial amount, r the annual rate, n the compounding periods per year, t the years, and PMT the contribution per period (your monthly input is scaled to the compounding frequency). The first term grows the initial sum; the second grows the stream of contributions.

What you need

Initial investment: the lump sum you start with — enter 0 if you are starting from scratch.
Monthly contribution: the amount you add every month, on top of which interest compounds.
Annual return: a realistic long-term average. Broad stock index funds have historically returned ~7–10% before inflation; savings accounts much less.

Worked example

$10,000 initial plus $200/month at 7% compounded monthly for 20 years: the initial sum grows to about $40,387 and the contributions to about $104,185 — a final balance near $144,572. You deposited $58,000; the remaining ~$86,572 is pure interest.

Practical tips

Increase the years, not just the amount: at 7%, money roughly doubles every 10 years (rule of 72).
Monthly compounding beats yearly at the same nominal rate — the difference grows with the rate.
Inflation quietly taxes returns: at 3% inflation, a 7% nominal return is about 4% in real purchasing power.
Automate contributions so compounding never skips a month.

Growth of $10,000 with no contributions (monthly compounding)

Rate	10 years	20 years	30 years
3%	$13,494	$18,208	$24,568
5%	$16,470	$27,126	$44,677
7%	$20,097	$40,387	$81,165
10%	$27,070	$73,281	$198,374

Common mistakes

1 Assuming a high return is guaranteed — markets fluctuate, and sequence of returns matters in real portfolios.
2 Forgetting fees: a 1% annual fund fee can consume a quarter of the final balance over 30 years.
3 Comparing accounts by nominal rate without checking the compounding frequency (APY vs APR).

Frequently asked questions

What is compound interest in simple terms?

Interest that is added to your balance, so the next period’s interest is calculated on a bigger amount. Your money grows exponentially instead of linearly.

What is the rule of 72?

Divide 72 by the annual rate to estimate the years needed to double your money. At 8%, money doubles in about 9 years.

Does compounding frequency really matter?

Yes, modestly: $10,000 at 12% for 10 years becomes $33,004 with yearly compounding and $33,039 with monthly. The higher the rate and the longer the term, the bigger the gap.

Can compound interest work against me?

Yes — credit card and loan balances compound too. A debt at 24% APR doubles in about 3 years if unpaid.