Compound Interest Calculator
See how your money grows exponentially with compound interest over time.
$100.00/month
$108,170
final balance
Total Invested
$34,000
Interest Earned
$74,170
Effective Annual Rate
8.300%
Interest / Invested
218.1%
Formula
The calculator uses the compound interest formula to project your investment growth:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Where A = final amount, P = principal, r = annual rate, n = compounding periods per year, t = years, PMT = regular contribution
Worked Example
You invest $10,000 in a savings account earning 4% APY, compounded monthly, and add $200 each month for 10 years:
- Starting principal: $10,000
- Monthly contribution: $200
- Annual interest rate: 4%
- Compounding frequency: Monthly (12 times/year)
- Final amount after 10 years: $44,358
- Total contributions: $34,000 ($10,000 initial + $24,000 in deposits)
- Interest earned: $10,358
Common Questions
What's the power of compound interest?
You earn interest on your interest. Early contributions have decades to grow, so starting as soon as possible dramatically increases your wealth. At an 8% average return, a $5,000 investment at age 25 can become $100,000+ by age 65.
How does compounding frequency matter?
Daily compounding earns slightly more than monthly, which earns more than yearly. The difference is small for lower rates (e.g., savings accounts) but significant for high-yield investments.
What if I increase my contributions over time?
Most people increase savings as their income grows. This calculator assumes fixed contributions, but you can manually adjust to model annual increases and see the impact.
How do taxes and inflation affect my growth?
This calculator shows nominal returns (before taxes and inflation). In reality, taxes may reduce returns, and inflation erodes purchasing power. Tax-advantaged accounts (401k, IRA) help offset these effects.
Key Takeaways
- Time is your greatest asset — starting early gives compounding decades to work, dramatically increasing your final wealth.
- Even small contributions add up over time. $200/month for 30 years at 6% returns ~$201,000.
- A 1–2% difference in returns seems small but compounds into tens of thousands of dollars over decades — shop for better rates.
- Consistent investing (dollar-cost averaging) removes emotion and leverages compound growth in volatile markets.