Compound Interest Calculator
See how your savings grow over time with compound interest and regular contributions.
Your numbers
Historic stock-market average is ~7% after inflation.
Future value
- Total contributions
- $130,000.00
- Interest earned
- $170,850.72
- Future value
- $300,850.72
Compound interest is the engine behind almost every long-term investment. It's what turns steady, modest saving into a meaningful sum — not through luck, but through math that rewards time. Here's how it works and how to model it for your own goals.
What compound interest is
Compound interest is interest earned on your balance plus the interest already added. Unlike simple interest, which only ever pays on your original amount, compounding pays on a base that keeps growing — so the growth accelerates over time.
This calculator compounds monthly and assumes you add a fixed monthly contribution, which mirrors how most people actually invest (a starting amount plus regular deposits).
The two parts of the formula
The future value is the sum of two pieces:
- Your starting amount growing:
principal × (1 + r)^n - Your contributions growing:
contribution × ((1 + r)^n − 1) ÷ r
…where r is the monthly rate (annual rate ÷ 12) and n is the number of months. The Compound Interest Calculator runs both for you and splits the result into what you put in versus what the interest added.
A worked example
Start with $10,000, add $500/month, at a 7% annual return for 20 years:
- You contribute $130,000 total ($10k + $500 × 240 months).
- It grows to roughly $300,850.
- That means about $170,850 is interest — more than you contributed.
The longer the horizon, the more lopsided that split becomes in your favor. That's the whole point of compounding.
Time is the biggest lever
Because growth compounds, the earliest dollars matter most — they have the most time to multiply. Starting ten years earlier often beats contributing much more later. If you can only change one variable, change when you start, not how much.
What rate should you use?
For long-term stock-market investing, a common assumption is around 7% after inflation (historically markets have averaged higher before inflation). Savings accounts and bonds are lower and safer. Don't model an optimistic rate you can't realistically earn — and remember real returns vary year to year, even if the average holds.
The bottom line
Compound interest rewards consistency and time more than size. Set a starting amount, a monthly contribution, a realistic rate, and a long horizon in the Compound Interest Calculator, and watch how much of the final number comes from interest rather than your own deposits. Then start as early as you can — that's the variable you can never get back.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on your balance plus the interest already added. Because the base keeps growing, your returns accelerate over time — unlike simple interest, which only ever pays on the original amount.
How is compound interest calculated?
Future value = principal × (1 + r)ⁿ for the lump sum, plus contribution × ((1 + r)ⁿ − 1) ÷ r for regular deposits, where r is the periodic rate and n the number of periods. This calculator compounds monthly.
Why does starting early matter so much?
Because growth compounds, your earliest dollars have the most time to multiply. Starting ten years earlier often beats contributing far more later — time is the most powerful variable in the formula, and the one you can’t get back.
What is the Rule of 72?
A shortcut to estimate how long money takes to double: divide 72 by the annual return. At 6% it’s about 12 years; at 9%, about 8 years. It’s an approximation, but close enough to gauge the cost of waiting.
What interest rate should I use?
For long-term stock-market investing, ~7% after inflation is a common assumption (markets have historically averaged more before inflation). Savings accounts and bonds are lower and safer. Use a realistic rate for what you’re actually investing in.
How often should interest compound?
More frequent compounding earns slightly more — daily beats monthly beats annually — but the difference is small compared with the rate, contributions, and time. This calculator compounds monthly, which matches most real-world accounts and investments.
Do regular contributions really make a difference?
Enormously. A modest monthly contribution, compounded over decades, often grows to more than the original lump sum. The calculator splits your result into contributions versus interest so you can see how much the growth adds on top of what you put in.
Does this account for inflation or taxes?
No — it shows nominal growth before inflation and taxes. To estimate real purchasing power, use a rate that’s already adjusted for inflation (e.g., ~7% instead of ~10%), and remember that taxes may apply depending on the account type.