Compound Interest Calculator
See how your money grows over time with the power of compounding. Enter your initial investment, monthly contributions, interest rate, and time horizon.
Last updated: · Mathematical formula — no external data source required
An initial investment of $10,000.00 with $200.00/month at 7% for 20 years (compounded monthly) grows to approximately $144,572.72. Of that, $58,000.00 is from your contributions and $86,572.72 is interest.
Results
Growth Over Time
Final balance: $144,573
Year-by-Year Breakdown
| Year | Balance | Contributions | Interest |
|---|---|---|---|
| 1 | $13,201.42 | $12,400.00 | $801.42 |
| 2 | $16,634.27 | $14,800.00 | $1,834.27 |
| 3 | $20,315.28 | $17,200.00 | $3,115.28 |
| 4 | $24,262.39 | $19,600.00 | $4,662.39 |
| 5 | $28,494.83 | $22,000.00 | $6,494.83 |
| 6 | $33,033.24 | $24,400.00 | $8,633.24 |
| 7 | $37,899.74 | $26,800.00 | $11,099.74 |
| 8 | $43,118.03 | $29,200.00 | $13,918.03 |
| 9 | $48,713.55 | $31,600.00 | $17,113.55 |
| 10 | $54,713.58 | $34,000.00 | $20,713.58 |
| 11 | $61,147.34 | $36,400.00 | $24,747.34 |
| 12 | $68,046.20 | $38,800.00 | $29,246.20 |
| 13 | $75,443.79 | $41,200.00 | $34,243.79 |
| 14 | $83,376.14 | $43,600.00 | $39,776.14 |
| 15 | $91,881.93 | $46,000.00 | $45,881.93 |
| 16 | $101,002.60 | $48,400.00 | $52,602.60 |
| 17 | $110,782.60 | $50,800.00 | $59,982.60 |
| 18 | $121,269.60 | $53,200.00 | $68,069.60 |
| 19 | $132,514.70 | $55,600.00 | $76,914.70 |
| 20 | $144,572.72 | $58,000.00 | $86,572.72 |
How This Is Calculated
This calculator uses the standard compound interest formula with periodic contributions:
A = P(1 + r/n)nt + PMT × [((1 + r/n)nt - 1) / (r/n)]- P
- = Initial principal (your starting investment)
- r
- = Annual interest rate (as a decimal)
- n
- = Number of times interest is compounded per year
- t
- = Number of years
- PMT
- = Contribution per compounding period
- A
- = Future value (total amount after t years)
This is a universally accepted mathematical formula. The result is exact for the inputs you provide. Real-world investment returns fluctuate year to year, so use this as a projection tool with your expected average return.
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 is only calculated on the principal), compound interest grows exponentially over time because you earn interest on your interest. This is why Albert Einstein reportedly called it the eighth wonder of the world.
- How does compounding frequency affect my returns?
- More frequent compounding produces slightly higher returns because interest is calculated and added to the principal more often. For example, $10,000 at 7% for 10 years yields $19,671.51 with annual compounding, $19,838.32 with monthly compounding, and $19,861.04 with daily compounding. The difference is most noticeable at higher interest rates and longer time periods.
- What is a realistic annual return rate to use?
- The S&P 500 has averaged approximately 10% annually before inflation (about 7% after inflation) since 1926. High-yield savings accounts currently offer 4-5% APY. CD rates vary by term. For conservative projections, many financial planners use 6-7%. This calculator lets you model any rate — try different scenarios to see the range of outcomes.
- How accurate is this compound interest calculator?
- This calculator uses the standard mathematical compound interest formula: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]. The formula is exact for the inputs you provide. Real-world returns vary because actual investment returns fluctuate year to year, and factors like taxes, fees, and inflation affect net returns. Use this as a projection tool, not a guarantee.