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Compound Interest Calculator
See how your investment grows over time with compound interest and optional monthly contributions.
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Final Amount
Total Contributions
Total Interest Earned
Calculated in your browser. We never see your numbers.
| Year | Balance | Interest Earned |
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How to Use This Calculator
Enter your initial investment (the lump sum you start with), the annual interest rate you expect to earn, and how frequently interest compounds. Set your investment period in years, and optionally add a monthly contribution amount if you plan to contribute regularly. Results update instantly. The projection table shows your balance at the end of each year for up to 10 years, letting you see exactly how your money grows. Use the compounding frequency selector to compare daily vs. monthly vs. annual compounding at the same nominal rate.
Compound Interest Formula
The standard compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial investment), r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is time in years. For example, $1,000 at 5% compounded monthly for 10 years: r/n = 0.05/12 = 0.004167, nt = 120. A = 1,000 × (1.004167)^120 = $1,647.01. When adding a monthly contribution C, the future value of the contribution stream is added: FV_contrib = C × (12/n) × ((1 + r/n)^(nt) − 1) / (r/n). At 0% interest, the formula simplifies to A = P + C × 12 × t.
Example Calculation
Suppose you invest $5,000 at a 7% annual rate compounded monthly and contribute $200 per month for 20 years. Your total contributions are $5,000 + $200 × 12 × 20 = $53,000. With monthly compounding, the growth factor (1 + 0.07/12)^240 ≈ 4.039. Principal part: $5,000 × 4.039 = $20,194. Contribution stream part: $200 × (4.039 − 1) / (0.07/12) ≈ $104,185. Final amount: approximately $124,379 — meaning $71,379 in interest earned on top of $53,000 contributed. This illustrates the extraordinary power of combining regular contributions with compound growth over time.
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Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only grows on the original amount), compound interest grows exponentially — your interest earns interest. This compounding effect makes it one of the most powerful forces in personal finance, whether you're saving (where it works in your favor) or borrowing (where it works against you).
How often should interest compound for maximum growth?
More frequent compounding produces higher returns, though the differences narrow as frequency increases. Daily compounding yields slightly more than monthly, which yields more than quarterly, which yields more than annual. For example, $10,000 at 6% for 10 years: annual compounding = $17,908; monthly = $18,194; daily = $18,221. The difference between monthly and daily is modest, so don't stress over compounding frequency — the rate and time invested matter far more.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut to estimate how long it takes to double your money with compound interest. Simply divide 72 by the annual interest rate: at 6%, money doubles in roughly 72 ÷ 6 = 12 years. At 9%, it doubles in about 8 years. At 3%, it takes 24 years. This rule works well for rates between 2% and 20%. For exact calculations, use this compound interest calculator.
How does a monthly contribution affect compound growth?
Regular monthly contributions dramatically accelerate wealth accumulation through two mechanisms: you're adding more principal, AND each new contribution immediately begins compounding. For example, $1,000 invested at 7% for 30 years grows to about $7,612. Add just $100/month and the final amount jumps to over $121,000 — the contributions totaled $37,000, but compound growth generated an additional $76,000+ in interest. Starting contributions early maximizes this effect.
What is the difference between compound and simple interest?
Simple interest is calculated only on the original principal: Interest = P × r × t. Compound interest reinvests earned interest, so you earn returns on returns. Over short periods (1–2 years), the difference is small. Over decades, it's enormous. $10,000 at 7% for 30 years: simple interest yields $31,000; compound interest (monthly) yields over $81,000. The longer the time horizon, the more powerful compound interest becomes — which is why starting to save early is so valuable.
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