Compound Interest Calculator
See how money grows when interest earns interest, with optional regular contributions.
What the Compound Interest Calculator does
Compound interest pays interest on your interest. The effect is small at first and then accelerates, which is why time in the market matters more than the size of any single contribution. More frequent compounding raises the effective rate slightly.
Formula
A = P × (1 + r/n)^(n×t)With contributions: FV = PMT × ((1 + i)^m − 1) ÷ iEffective annual rate = (1 + r/n)ⁿ − 1
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Initial amount | selected currency | Yes | Accepts more than 0. |
| Annual interest rate | % | Yes | — |
| Time period | years | Yes | Accepts more than 0, up to 100. |
| Compounding frequency | one of 7 options | Yes | — |
| Regular contribution | selected currency | Optional | Accepts 0 or more. |
| Contribution frequency | one of 3 options | Yes | — |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Compounding frequency and Contribution frequency.
- Enter Initial amount, Annual interest rate and Time period.
- Optionally add Regular contribution.
- Select Calculate.
Worked example
$10,000 at 8% compounded monthly for 20 years, adding $200 a month.
- Initial
- 10000
- Rate
- 8
- Years
- 20
- Frequency
- Monthly
- Contribution
- 200
Future value ≈ $166,798 from $58,000 contributed — about $108,798 is growth.
Reading the result
- The gap between your total contributions and the final balance is the compounding — the part earned by returns on previous returns rather than by deposits.
- Compounding frequency matters far less than rate and time. Moving from annual to monthly compounding at 6% adds roughly 0.17 percentage points of effective yield; doubling the time horizon changes the outcome far more.
- These are nominal figures. At 3% inflation, money roughly halves in purchasing power over 24 years, so a long projection overstates real spending power.
Assumptions and limitations
- A single constant rate of return, applied every period. No real investment behaves this way; markets deliver the same average through a sequence of very different years.
- No tax, platform fees or fund charges are deducted. A 1% annual fee removes a substantial share of a multi-decade result.
- Contributions are assumed to arrive exactly on schedule and are never withdrawn.
Common mistakes
- Entering the rate as a decimal when the field expects a percentage, so 0.07 is read as 0.07% rather than 7%.
- Treating a projection as a forecast. The output shows what a constant rate would produce, which is a planning aid, not a prediction.
- Comparing a nominal projection against a real-terms goal without adjusting either for inflation.
Frequently asked questions
How often should interest compound?
More often is better for savers. At 8%, annual compounding yields 8.00% effective while daily yields 8.33% — real but modest.
What is the rule of 72?
Divide 72 by the interest rate to estimate the years needed to double your money. At 8% that is about 9 years.