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Compound Interest Calculator

Project savings growth with compound interest and monthly contributions.

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Enter a starting balance, an annual rate, a contribution amount and a horizon. We show the future balance, total contributions and interest earned with your choice of compounding period.

Final balance

$144,572.72

Total contributions

$58,000.00

Interest earned

$86,572.72

How to use it

  1. Enter principal

    Your starting balance.

  2. Enter rate and horizon

    Annual rate as a percentage, term in years.

  3. Add monthly contributions

    Optional - the recurring amount you'll add each month.

What is it?

Compound interest is interest earned on both the original principal and on the interest previously accumulated. The future-value formula is FV = P(1 + r/n)^(n·t) for a lump sum, plus the future value of a periodic-contribution annuity for any monthly additions. This calculator runs both and adds them.

When to use it

Planning retirement, comparing savings accounts, modelling DCA into an index fund, deciding whether to overpay a mortgage versus invest the difference, projecting a child's college fund.

Common mistakes

Confusing nominal and effective rates - a 6% nominal compounded monthly is ~6.17% effective. Forgetting inflation - the projected balance is nominal; real purchasing power is lower. And assuming historical returns continue - 7% real for equities is a long-run average, not a guarantee.

FAQ

What's the difference between yearly and monthly compounding?
Monthly compounding credits interest 12 times per year on the running balance, so it grows slightly faster than yearly compounding at the same nominal rate. Daily compounding edges further still.

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