Compound Interest Calculator
A compound interest calculator shows how money can grow when earnings are added to the balance and begin earning returns too. Use it to model savings, investments, and long-term financial goals.
Quick answer
Compound growth accelerates when returns stay invested. Time, contribution size, return rate, and compounding frequency all affect the ending balance.
Calculator
How to use this calculator
- Enter the amount you have today.
- Add the amount you plan to contribute each month.
- Choose an expected annual return and time horizon.
- Review projected contributions, growth, and ending balance.
Explanation
What it is
A compound interest calculator shows how money can grow when earnings are added to the balance and begin earning returns too. Use it to model savings, investments, and long-term financial goals.
How it works
The calculator grows the starting balance using A = P(1 + r/m)^(mt) and adds the future value of recurring monthly contributions. It assumes a steady rate and contributions made at the end of each month.
When to use it
Use this calculator to compare realistic scenarios before making a financial decision, and update the inputs when rates, costs, income, or goals change.
Limitations
- The result is an estimate based only on the inputs and assumptions shown.
- It does not evaluate eligibility, product terms, market conditions, or personal legal and tax circumstances.
- Actual outcomes can differ because of fees, timing, rounding, taxes, and provider-specific methods.
Key terms
- Compound interest
- Growth earned on both the original principal and prior earnings.
- Principal
- The starting amount invested or saved.
- Contribution
- Money added regularly to the account.
- Rate of return
- The assumed percentage gain or loss over a year.
- Time horizon
- The length of time the money remains invested.
Formula
The calculator grows the starting balance using A = P(1 + r/m)^(mt) and adds the future value of recurring monthly contributions. It assumes a steady rate and contributions made at the end of each month.
Worked example
Starting with $10,000, adding $500 each month, and assuming a 7% annual return for 20 years demonstrates how contributions and reinvested growth can combine into the ending balance.
FAQ
How much will $10,000 grow to in 20 years?
At a hypothetical 7% annual return with no additional contributions, $10,000 would grow to roughly $38,700 after 20 years. Actual investment returns vary and may be negative in some periods.
What is a realistic annual return to use?
There is no guaranteed rate. A planning assumption should reflect the investment mix, fees, taxes, inflation, and your risk tolerance. Testing several rates is more useful than relying on one optimistic estimate.
How often should interest compound?
Savings accounts may compound daily or monthly, while investment returns do not arrive at a fixed rate. More frequent compounding creates a small advantage when the stated rate is the same.
Does this calculator account for inflation?
No. Results are shown in future dollars. To estimate purchasing power, use a lower real return or compare the result with an assumed inflation rate.
Are taxes and investment fees included?
No. Taxes, fund expenses, advisory fees, and trading costs can reduce actual returns.
Why do early contributions matter so much?
Money contributed earlier has more time to earn returns and for those returns to compound. Starting sooner can reduce the amount needed later.
Common mistakes
- Treating a steady return as guaranteed.
- Ignoring fees, taxes, and inflation.
- Using an unrealistically high return.
- Forgetting that contribution timing changes results.
Tips
- Run conservative, base, and optimistic scenarios.
- Increase contributions before increasing the assumed return.
- Compare future dollars with inflation-adjusted purchasing power.
- Review actual fees.
Sources and editorial review
Educational estimates only; not personalized financial, tax, legal, lending, investment, or insurance advice.