How to use this compound interest calculator
- Initial deposit — the amount you start with. It can be zero.
- Monthly contribution — what you add each month. Deposits are counted at the end of each month, which is how most automatic transfers work.
- Annual interest rate — the nominal yearly rate. For a savings account or CD, use the bank's rate; for a stock or bond portfolio, use a cautious long-term expectation.
- Years to grow — how long the money stays invested.
- Compounding frequency — how often interest is credited and starts earning interest itself.
The bar splits the projected balance into your deposit, your contributions and interest; the yearly table shows the interest share growing over time.
The compound interest formula
For a single deposit, compound interest follows:
FV = P × (1 + r/n)n × t
where P is the starting amount, r the annual rate as a decimal, n the number of compounding periods per year and t the number of years. Regular monthly contributions C add the future value of an annuity:
FVcontributions = C × ((1 + i)m − 1) ÷ i
with i the monthly rate and m the number of months. When interest compounds monthly, i is simply r ÷ 12. When it compounds daily, quarterly or annually, the calculator converts the annual rate to the monthly rate that produces the same yearly growth, i = (1 + r/n)n/12 − 1, so your deposit and your contributions are treated consistently.
Worked example
You invest $10,000 today and add $200 at the end of every month for 10 years, earning 7% compounded monthly. The monthly rate is 0.07 ÷ 12 ≈ 0.5833% and there are 120 months.
- The $10,000 grows to 10,000 × 1.005833120 = $20,096.61.
- The 120 contributions of $200 grow to $34,616.96.
- Total balance: $54,713.58, of which $34,000 is money you put in and $20,713.58 is interest.
Does compounding frequency matter?
More frequent compounding means interest starts earning interest sooner, but the effect is smaller than most people expect. Here is $10,000 at a 6% nominal rate for 10 years:
| Compounding | Balance after 10 years | Effective annual rate |
|---|---|---|
| Annually | $17,908.48 | 6% |
| Quarterly | $18,140.18 | 6.14% |
| Monthly | $18,193.97 | 6.17% |
| Daily | $18,220.29 | 6.18% |
Moving from annual to monthly compounding is worth a few hundred dollars here; moving from monthly to daily adds less than $30. The rate itself and the number of years matter far more than the compounding schedule.
Time is the biggest lever
Because growth builds on growth, the last decade of saving often adds more interest than all the earlier decades combined. Saving $200 a month at 7% compounded monthly:
| Saving for | You contribute | Interest earned | Balance |
|---|---|---|---|
| 10 years | $24,000 | $10,617 | $34,617 |
| 20 years | $48,000 | $56,185 | $104,185 |
| 30 years | $72,000 | $171,994 | $243,994 |
| 40 years | $96,000 | $428,963 | $524,963 |
Doubling the time from 20 to 40 years doubles your contributions but multiplies the final balance by roughly five.
The Rule of 72
For a quick mental estimate, divide 72 by the annual rate to get the approximate number of years it takes money to double. At 6%, 72 ÷ 6 = 12 years (the exact answer is about 11.9). At 9%, it takes about 8 years.
What this calculator leaves out
- Taxes. Interest in a regular taxable account is usually taxed each year, which slows growth. Tax-advantaged accounts such as a 401(k) or IRA defer or avoid that drag.
- Inflation. A balance 30 years from now will buy less than the same number of dollars today. Our retirement calculator shows results in today's dollars.
- Fees and variable returns. Fund expenses reduce your return, and investment returns arrive unevenly — some years are negative.
Treat the result as an estimate for planning, not a guarantee or investment advice.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal. Compound interest is also paid on interest already earned, so the balance grows faster each year. Compare the two with our simple interest calculator.
Does daily compounding make a big difference?
Not much compared with monthly compounding. At 6% the effective annual rate is about 6.17% with monthly compounding and about 6.18% with daily compounding. The rate and time invested matter far more.
What interest rate should I enter?
For a savings account or CD, use the advertised rate. For investments there is no guaranteed rate, so use a conservative long-term assumption and try a few different values to see a range of outcomes.
How is APY related to compounding?
APY (annual percentage yield) is the yearly growth rate after compounding: APY = (1 + r/n)n − 1. A 5% rate compounded monthly is a 5.12% APY. Our CD calculator explains this in more detail.
Are contributions added at the start or end of each month?
At the end. If you deposit at the start of each month instead, each contribution earns one extra month of interest, so your real balance will be slightly higher than shown.
Last updated: October 8, 2026