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Compound interest calculator

See how your money grows: initial investment, regular contributions, compounding frequency and total interest earned.

Future balance
$171,714
Total contributed
$82,000
Interest earned
$89,714

Convention: contributions made at the end of each period, annual rate divided by the compounding frequency.

À propos de cet outil

What this calculator does and who it is for

Compound interest is the mechanism by which the returns you have already earned start earning returns of their own. Your balance no longer grows in a straight line but on a curve, because every new period starts from a higher base than the one before it. This calculator makes that curve visible. You enter an initial investment, a regular contribution, an annual rate of return, a length in years and how often the account compounds, and it returns three numbers that matter: the future balance, the total you actually contributed out of pocket, and the interest the money earned by itself.

The tool is built for anyone saving toward a real goal. If you are funding a 401(k) or a Roth IRA, it shows what a fixed payroll deferral becomes over a working career. If you are building a brokerage account with automatic monthly transfers, it separates the part of your future balance that came from your paycheck from the part that came from market returns — and that split is usually the most surprising output on the page. Parents use it to size a 529 plan contribution against a college bill eighteen years out. Savers comparing a high-yield savings account with a certificate of deposit use it to see whether a difference of half a percentage point is worth moving money for. It also works in reverse as a warning: apply the same math to a credit card balance at 22% APR and you see exactly how fast compounding works against a borrower.

How the calculation works

With no contributions, the classic formula applies: FV = P × (1 + r/n)nt, where P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year and t is the number of years. Simple interest, by contrast, pays only on the original principal and grows in a straight line. The gap between the two is small over five years and enormous over thirty.

When you add recurring deposits, an annuity term is layered on top: FV = P × (1 + i)N + C × [((1 + i)N − 1) / i], where i is the periodic rate (r divided by n), N is the total number of periods and C is the contribution per period. This calculator assumes contributions land at the end of each period, which is the conservative convention and matches how most payroll deferrals and automatic transfers actually settle. Compounding frequency has a real but modest effect: a nominal 6% compounded monthly produces an effective annual yield of 6.17%, which is why banks are required to quote APY rather than a nominal rate.

A worked example

Suppose you start with $10,000 and add $300 a month for 25 years at a 7% annual return, compounded monthly. The periodic rate is 0.5833% and there are 300 periods. The starting $10,000 alone grows to roughly $56,600. The stream of $300 payments adds roughly $243,000. The future balance lands near $299,600, of which $100,000 came out of your own pocket — $10,000 up front plus $90,000 in contributions — and close to $199,600 is interest. In other words, two out of every three dollars in the final account were produced by the account itself, not by you.

Change one variable and the picture shifts sharply. Stop ten years earlier, at 15 years instead of 25, and the balance falls to about $122,700 even though you only contributed $36,000 less. That asymmetry is the whole point: the last decade of a long horizon does far more work than the first, because it compounds on the largest balance you will ever have.

How to use it well

Start with a realistic rate. The S&P 500 has returned roughly 10% a year nominally over the long run, closer to 7% after inflation, and a bond-heavy portfolio will run lower. Running the projection at 12% produces a number you are unlikely to see. Second, model fees explicitly by subtracting them from the rate: a 1% annual expense ratio on a 7% gross return means entering 6%, and over 25 years that single point can cost more than a fifth of the final balance. Third, use the rule of 72 as a sanity check — divide 72 by the rate to estimate the doubling time. At 7%, money doubles roughly every ten years.

Finally, treat contributions as the variable you actually control. You cannot set market returns, but you can automate transfers, raise them with every pay increase, and keep them running through downturns, when new contributions buy the most shares. Run the projection once with your current contribution and once with an extra $100 a month; the difference over twenty-five years is usually enough to change behavior.

For a deeper walkthrough with more scenarios, read our guide: How compound interest builds wealth over time.

Disclaimer

This calculator assumes a constant rate of return, which no market investment delivers. Real returns fluctuate, and the sequence of those returns affects outcomes, particularly near retirement. Results are nominal and do not account for inflation, taxes, account fees or withdrawals. Nothing here is investment advice; consult a licensed financial advisor for decisions about your own portfolio.

Frequently asked questions

What is the difference between simple and compound interest?
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Simple interest is always calculated on the original principal, so $10,000 at 6% pays exactly $600 every year forever. Compound interest is added to the balance and then earns interest itself: year two pays $636, year three pays $674, and the gap widens. Over 30 years, $10,000 grows to $28,000 with simple interest but $57,435 with annual compounding — the same rate, more than double the result.
How often should my account compound?
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More frequent compounding always helps, but less than most people expect. A nominal 6% rate compounded annually yields exactly 6%; compounded monthly it yields an effective 6.17%; compounded daily, 6.18%. Because the difference is small, banks are required to disclose APY, which already bakes in the frequency. Use APY when comparing accounts and you can ignore the underlying schedule.
What rate of return should I use for a long-term projection?
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Match the rate to the asset. High-yield savings and CDs track short-term rates and change every year. A diversified stock portfolio has returned roughly 10% nominally over the long run, closer to 7% after inflation, with severe drawdowns along the way. Subtract fund expense ratios and advisory fees from whatever figure you choose, and run a pessimistic scenario at 4% to see how the plan holds up.
Does the calculator account for taxes and inflation?
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No. Results are nominal and gross. Investments in a taxable brokerage account owe capital gains tax on realized gains and income tax on dividends and interest, while a Roth IRA grows tax free and a traditional 401(k) is taxed on withdrawal. Inflation is a separate drag: 7% nominal growth with 3% inflation is roughly 4% in real purchasing power. To model real returns, enter the inflation-adjusted rate.
Is it better to invest a lump sum or contribute monthly?
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Mathematically, investing a lump sum immediately wins most of the time, because the money is exposed to returns for longer. In practice, most people do not have a lump sum available and contribute from each paycheck instead. Dollar-cost averaging through automatic monthly contributions has a behavioral advantage: it keeps you buying during downturns, when shares are cheapest, rather than trying to time the market.