Compound Interest Calculator
Enter a starting amount, a rate, how long you are leaving it and anything you add each month. This shows what it grows to — and splits the result into what you put in and what the compounding earned.
Final balance
$300,850.72
- Final balance
- $300,850.72
- You put in
- $130,000.00
- Growth
- $170,850.72
- Starting amount
- $10,000.00
- Contributions
- $120,000.00
- More than half the final balance is growth rather than money you put in. That crossover is the whole argument for starting early.
- Contributions are treated as arriving at the end of each period, which is the conservative convention.
- A steady rate every year is a modelling convenience, not how markets behave. Treat the result as a projection rather than a forecast.
About the compound interest calculator
Compounding is simply interest earning interest. In year one it looks unremarkable; the effect is almost entirely about time, which is why the same monthly amount saved from twenty-five rather than thirty-five produces a startlingly different result.
The split this shows is the point. Five hundred a month for twenty years at 7% comes to about $260,000, of which $120,000 is money you deposited and $140,000 is growth. More than half the balance was never yours to begin with. Push the same plan to thirty years and the deposits rise by half while the balance more than doubles.
A steady annual rate is a modelling convenience rather than a description of reality — real returns arrive unevenly and sometimes negatively. Treat the output as a projection for comparing options, not a forecast of what you will have.
What it works out
- Growth on a lump sum, contributions, or both
- Annual, quarterly or monthly compounding
- The split between deposits and growth
- Any rate and any period
The formula
A = P(1 + r)ⁿ + C × ((1 + r)ⁿ − 1) ÷ r
Two things are happening and the formula has a term for each. The first part grows your starting balance. The second grows the stream of contributions, each of which has been compounding for a different length of time — the earliest for the whole period, the most recent for barely any.
r is the rate per compounding period and n is the number of periods, so for monthly compounding at 7% a year, r is 0.5833% and n is twelve times the number of years.
Compounding frequency matters less than people expect. The same 7% over ten years on $10,000 gives $19,672 compounded annually and $20,097 compounded monthly — a difference of about 2%. Rate and time dominate; frequency is a rounding detail by comparison.
Time is the variable that does the work, and it does it non-linearly. Saving $500 a month at 7% for ten years produces about $86,000. For twenty years it produces $260,000 — three times as much for twice the deposits. For thirty, about $610,000. The last decade contributes more than the first two combined.
- P
- The starting balance.
- C
- The contribution each period.
- r
- The rate per period — the annual rate divided by the number of periods a year.
- n
- The total number of periods.
- A
- The final balance.
A worked example
Ten thousand to start, five hundred a month, 7% a year for twenty years.
That works out to $300,850.72 .
- Final balance
- $300,850.72
- You put in
- $130,000.00
- Growth
- $170,850.72
- Starting amount
- $10,000.00
- Contributions
- $120,000.00
Questions
How much will $500 a month grow to?
At 7% a year, about $86,000 after ten years, $260,000 after twenty and $610,000 after thirty. The deposits only triple across that span; the balance grows sevenfold, because the earliest contributions have the longest to compound.
What is compound interest, simply?
Interest paid on your interest as well as on your original money. In year one it is indistinguishable from simple interest. Over decades it is the difference between a balance that grows in a straight line and one that curves upward.
Does compounding frequency make much difference?
Less than most people assume. On $10,000 at 7% for ten years, annual compounding gives $19,672 and monthly gives $20,097 — around 2% apart. The rate and the number of years matter far more.
What rate should I use?
Whatever your account actually pays, if it is a savings account. For investments there is no correct answer, since returns vary year to year; people often model a range rather than a single figure, and running it twice at a pessimistic and an optimistic rate is more informative than one number.
Does this account for inflation?
No. The result is in today's money at face value, so a balance thirty years out will not buy what the same figure buys now. One common approach is to subtract expected inflation from your rate, which gives a rough result in today's purchasing power.
What about tax?
Not included, and it varies enormously by account type and country. Interest in a tax-sheltered account compounds untouched; in a taxable one, tax on the growth each year reduces what carries forward, so the real curve is flatter.
When are the contributions counted?
At the end of each period, which is the standard and slightly conservative convention. Contributing at the start of each period would grow marginally more, by roughly one period of interest.