Compound Interest Calculator: See Your Money Grow
Albert Einstein reportedly called compound interest the eighth wonder of the world. This free calculator shows why: enter your starting amount, monthly contribution, interest rate and time horizon, and see exactly how much of your final balance is your own money and how much is interest doing the heavy lifting — year by year.
Compound Interest Calculator
How to Use This Calculator
Enter the amount you're starting with (zero is fine), how much you'll add each month, and the annual interest rate. For a savings account, use the APY shown on the account — it already accounts for compounding. For long-term investing, a common planning assumption is 5% to 7%.
Choose how often interest compounds — monthly is standard for savings accounts. Set your time horizon and click Calculate. You'll see the final balance, how much of it is your contributions versus interest, and a year-by-year table showing the growth accelerate.
The Formula
The future value combines two parts: FV = P(1 + i)ⁿ + PMT × [(1 + i)ⁿ − 1] ÷ i, where P is the initial deposit, PMT the monthly contribution, i the interest rate per month and n the number of months. The first term is the initial deposit compounding; the second is the stream of monthly contributions compounding.
Worked example: $5,000 initial, $200 per month, 7% per year for 20 years. Monthly rate i = 0.07 ÷ 12 = 0.005833, n = 240 months. First term: 5,000 × 1.005833²⁴⁰ = $20,193. Second term: 200 × (1.005833²⁴⁰ − 1) ÷ 0.005833 = $103,876. Total: $124,379 — of which $53,000 is your own money and $71,379 is compound interest.
Tips
Start early. Because of compounding, the first $100 you invest is worth far more than the last $100. Delaying investing by 10 years roughly halves your final balance at any realistic return.
Automate contributions on payday. Consistency matters more than the amount — regular automatic investing removes both the decision and the temptation to skip.
Watch the fees on investment products. A 1% annual management fee sounds small, but over 30 years it eats about a quarter of your final balance. Low-cost index funds are the usual antidote.
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is interest paid on interest. In the first period you earn interest on your original deposit; in the next period you earn interest on the original deposit plus the interest already earned. Over time the growth accelerates — that's why starting early matters more than starting big. A $100 monthly investment growing at 7% becomes about $122,000 in 30 years, even though you only put in $36,000.
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal every year. Compound interest is paid on the principal plus previously earned interest. At 5% for 10 years, $10,000 earns $5,000 with simple interest but $6,289 with annual compounding. The gap widens dramatically over longer periods — after 30 years it's $15,000 versus $33,219.
How often is interest compounded in savings accounts?
Most savings accounts compound daily and pay monthly; certificates of deposit often compound daily or monthly; investments like stocks don't pay fixed interest at all. More frequent compounding is slightly better for you. The bank quotes an APY (annual percentage yield) which already accounts for compounding — so compare accounts by APY, not the nominal rate.
What is the rule of 72?
The rule of 72 is a shortcut for estimating how long money takes to double: divide 72 by the annual interest rate. At 7%, money doubles in about 72 ÷ 7 ≈ 10.3 years. It works in reverse too — at 8% inflation, prices double in about 9 years. The rule is most accurate for rates between 4% and 12%.
What rate of return should I use in this calculator?
For bank savings and CDs, use the account's APY (often 0.5% to 5% depending on the era). For long-term stock market investing, a commonly used long-run average is about 7% per year after inflation, but actual returns vary wildly year to year and past performance does not guarantee future results. Try several rates to see a realistic range — for example 5%, 7% and 9%.