Compound Interest Calculator
See what your money becomes when interest earns interest — with optional monthly contributions and a year-by-year growth table.
| Year | Contributions to date | Interest to date | Balance |
|---|
The compound interest formula
- P — starting principal · r — annual rate (decimal) · n — compounding periods per year · t — years
With regular deposits, each contribution starts its own compounding clock; the calculator sums them all (a "future value of an annuity" on top of the lump sum).
$10,000 at 5% compounded monthly for 10 years:
A = 10,000 × (1 + 0.05/12)120 = 10,000 × 1.6470 = $16,470
Add $200/mo and the total reaches about $47,530 — of which $34,000 is money you put in and $13,530 is interest.
Why starting early beats saving more
Compounding rewards time disproportionately. At 7%, $300/mo invested from age 25 to 65 grows to roughly $790,000; starting at 35 yields about $367,000 — waiting ten years costs more than half the outcome, even though only a quarter less money was contributed. This is the engine behind every retirement projection and the reason the "eighth wonder of the world" nickname stuck. The Rule of 72 gives you the intuition: 72 ÷ rate ≈ years to double. At 8%, your money doubles every 9 years — four doublings in a 36-year career turns $1 into $16.
What the growth curve actually looks like
Compound growth isn't a straight line — it curves upward, slowly at first and steeply later, because each year's gains become next year's principal. This is why the last decade of a 30-year investing timeline typically adds more dollars in growth than the first two decades combined, even with identical contributions throughout.
Compounding frequency: how much does it matter?
| Frequency ($10,000 at 5%, 10 yrs) | Result |
|---|---|
| Annually | $16,289 |
| Quarterly | $16,436 |
| Monthly | $16,470 |
| Daily | $16,487 |
Daily vs. annual compounding is worth about 1.2% over a decade — real, but tiny next to a 1-point difference in the rate itself. Chase rate and time, not frequency.
Common mistakes when projecting compound growth
- Assuming a smooth, guaranteed rate. Real markets don't return a flat percentage every year — a "7% average" hides years of gains and losses. This calculator assumes a constant rate for clarity, but actual results will be lumpier.
- Forgetting inflation erodes the result. A future balance of $500,000 buys less in 30 years than it would today. Check the real (inflation-adjusted) purchasing power with the inflation calculator before treating a projection as a spending number.
- Underestimating the cost of fees. A 1% annual fee compounds against you exactly like a 1% lower return — over 30 years that routinely costs six figures on a substantial balance.
- Stopping contributions during a downturn. Pausing contributions when markets fall means missing the shares bought "on sale," which is often when the recovery's biggest gains accrue.
Frequently asked questions
What is compound interest?
Interest earned on principal and on prior interest — so growth accelerates instead of staying linear.
What is the compound interest formula?
A = P(1 + r/n)nt. $10,000 at 5% monthly for 10 years → $16,470.
How often should interest compound for the best return?
More often is better but marginal — rate and time dominate. See the table above.
What is the Rule of 72?
72 ÷ annual return ≈ years to double. 8% → ~9 years.
Does this calculator account for inflation?
No, the result is in nominal (future) dollars. Use the inflation calculator to see what that future balance is worth in today's purchasing power.
How much do investment fees really cost over time?
A great deal. Because fees compound the same way returns do, even a 1% annual fee can reduce a decades-long balance by tens or hundreds of thousands of dollars compared to a lower-fee alternative earning the same underlying return.
Related calculators
Note: Assumes a constant rate and end-of-month contributions; real returns vary. Not financial advice. Last reviewed: July 2026.