How is compound interest calculated?

Compound interest earns interest on both your principal and the interest already credited. For a lump sum the future value is FV = P(1 + r/n)^(n·t), where n is how many times a year interest compounds. Monthly contributions are added as a separate annuity and the two are summed - that's exactly what this calculator does.

How much difference do monthly contributions make?

A lot, over time. Each contribution starts earning interest of its own, so a modest monthly amount compounds into a large share of the final balance. The growth chart splits the total into the part you put in (contributions) and the part the market added (interest) so you can see the crossover.

What rate of return should I use?

For a savings account, use the rate your bank quotes. For long-run stock-market investing, many people model around 7% nominal (roughly the long-term average before inflation) - but that's an average over decades, not a guarantee, and any single year can be negative.

Should I adjust for inflation?

Yes, for long horizons. The projected balance is nominal; inflation erodes what it buys. Enter an inflation rate and the calculator shows the real value in today's money - the figure that actually reflects future purchasing power.

What's the difference between APY and the nominal rate?

The nominal rate is the headline annual rate; APY (effective annual yield) folds in how often it compounds. A 6% nominal rate compounded monthly is about 6.17% APY. The calculator shows the effective APY for the compounding frequency you pick.

Yearly, monthly or daily compounding - which should I choose?

Match it to the account: many savings accounts compound daily or monthly, bonds often pay semi-annually, and simple models use yearly. At the same nominal rate, more frequent compounding grows slightly faster - daily edges out monthly, which edges out yearly.

Retirement Savings Calculator (Compound Interest)

Free retirement savings calculator. Project how a nest egg plus monthly contributions compounds over decades - see the balance, interest earned and inflation-adjusted value.

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See how a starting balance plus steady monthly contributions can compound into a retirement nest egg over 20-40 years. Set your expected return, contribution and horizon, then read the projected balance, total interest and - crucially - the inflation-adjusted value in today's money. The growth chart shows how interest overtakes your contributions the longer you stay invested.

Principal

Annual rate (%)

Years

Monthly contribution

Compounding

Currency

Final balance

$772,315

Total contributions

$200,000

Interest earned

$572,315

Balance growthContributionsInterest

01530

Inflation (%)

Real value (today's money)

$426,373

Effective APY

7.23%

How to use it

Enter principal and currency
Your starting balance, in the currency you save or invest in.
Set rate, horizon and contribution
Annual rate as a percentage, the term in years, and the amount you add each month.
Read the projection
Final balance, total contributions, interest earned, effective APY and the inflation-adjusted real value, with a growth chart.
Explore and share
Open the year-by-year table to see each year's balance, or use Copy link to save and share the exact scenario.

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, adds them, and visualises the result as a year-by-year growth chart.

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, or working out how long it takes to save a house deposit.

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

How is compound interest calculated?: Compound interest earns interest on both your principal and the interest already credited. For a lump sum the future value is FV = P(1 + r/n)^(n·t), where n is how many times a year interest compounds. Monthly contributions are added as a separate annuity and the two are summed - that's exactly what this calculator does.
How much difference do monthly contributions make?: A lot, over time. Each contribution starts earning interest of its own, so a modest monthly amount compounds into a large share of the final balance. The growth chart splits the total into the part you put in (contributions) and the part the market added (interest) so you can see the crossover.
What rate of return should I use?: For a savings account, use the rate your bank quotes. For long-run stock-market investing, many people model around 7% nominal (roughly the long-term average before inflation) - but that's an average over decades, not a guarantee, and any single year can be negative.
Should I adjust for inflation?: Yes, for long horizons. The projected balance is nominal; inflation erodes what it buys. Enter an inflation rate and the calculator shows the real value in today's money - the figure that actually reflects future purchasing power.
What's the difference between APY and the nominal rate?: The nominal rate is the headline annual rate; APY (effective annual yield) folds in how often it compounds. A 6% nominal rate compounded monthly is about 6.17% APY. The calculator shows the effective APY for the compounding frequency you pick.
Yearly, monthly or daily compounding - which should I choose?: Match it to the account: many savings accounts compound daily or monthly, bonds often pay semi-annually, and simple models use yearly. At the same nominal rate, more frequent compounding grows slightly faster - daily edges out monthly, which edges out yearly.

Compound Interest Calculator

Project savings growth with a chart, any currency and inflation-adjusted value.

Try it out →

How to use it

Enter principal and currency

Set rate, horizon and contribution

Read the projection

Explore and share

What is it?

When to use it

Common mistakes

FAQ

Compound Interest Calculator

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