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Compound Interest Calculator

See how a starting amount and regular monthly deposits grow over time when interest earns interest.

How it works

Compound interest means each period's interest is added to the balance, so the next period earns interest on a bigger amount. With no deposits, the future value is A = P × (1 + r/n)^(n×t), where P is the starting amount, r the yearly rate, n the number of compounding periods a year and t the number of years.

Monthly contributions are added at the end of each month and then grow at the same rate. The calculator converts your chosen compounding frequency into an equivalent monthly rate so every deposit is treated fairly.

Worked example

Put in $10,000 at 5% a year compounded yearly and leave it for 10 years: 10,000 × 1.05^10 = $16,288.95. Now start with $10,000, add $200 a month, and earn 7% compounded monthly. After 10 years you have deposited $34,000 and the balance is about $54,714, so more than $20,700 is interest.

The rule of 72

For a quick estimate, divide 72 by the yearly rate to find roughly how many years it takes money to double. At 6% it doubles in about 12 years; at 9%, about 8 years.

Tips for growing savings

• Start early. Time is the biggest driver of compound growth, so small deposits in your twenties can beat larger ones later.
• Compare the effective annual rate (shown in the results), not just the headline rate, when choosing between accounts.
• Investment returns are not guaranteed and vary from year to year. Use a lower rate to see a cautious scenario.
• Fees and taxes reduce your real return, so subtract them from the rate for a more realistic picture.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is paid only on the original amount. Compound interest is also paid on interest already earned, so the balance grows faster over time.

Does compounding frequency matter much?

A little. Daily compounding earns slightly more than monthly or yearly at the same rate, but the rate and the number of years matter far more.

What rate should I use for stock investments?

Many people use 5% to 7% a year after inflation as a long-term estimate, but real returns can be much higher or lower in any given period.

Are contributions added at the start or end of each month?

At the end of each month, which is the most common assumption and gives a slightly cautious result.

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