Compound Interest Calculator
Model how an initial balance and regular monthly contributions grow with compounding over time.
Last reviewed: June 2026| Year | Contributions | Interest | Balance |
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Quick Answer
Compound interest is calculated with the formula A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the number of years. Enter your principal, rate, and term above to see the growth and total interest earned.
What this compound interest calculator estimates
This calculator models growth from an initial investment, a recurring monthly contribution, an estimated annual rate, a time horizon, and a compounding frequency. It returns the future value, total contributions, total interest earned, and a year-by-year table showing cumulative contributions, interest, and ending balance.
The page is useful for savings goals, CD comparisons, retirement illustrations, and general investing what-if scenarios. It does not model taxes, account fees, fund expense ratios, inflation-adjusted value, market volatility, changing contribution schedules, withdrawals, employer matches, or contribution limits. Treat the interest rate as an assumption, not a promise.
Formula and contribution timing
Without added contributions, compound interest follows A = P(1 + r/n)^(nt), where P is the starting principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the number of years. This calculator also supports monthly contributions, so it simulates each compounding period instead of relying only on the no-contribution formula.
For each compounding period, the calculator first applies interest to the current balance. It then adds the scheduled contribution for that period. Monthly contributions are converted into a per-period amount by multiplying by 12 and dividing by the selected compounding frequency. This means contributions are treated as end-of-period additions in the model.
Worked default example
With the default inputs, a $10,000 starting balance, $500 monthly contribution, 7% annual rate, 20-year horizon, and monthly compounding produce a future value of about $300,850.72. Total contributions are $130,000.00, which includes the initial $10,000 plus $120,000 of monthly contributions. The remaining $170,850.72 is modeled interest earned.
Changing the time horizon usually has a larger effect than changing the compounding frequency. For example, the same contribution amount has more time to earn interest when it starts earlier. A higher assumed rate can also increase the modeled future value, but it usually comes with more uncertainty if the rate represents investment returns instead of a guaranteed savings rate.
Common mistakes
- Assuming a smooth return: Investment returns do not arrive in a steady line even when the long-run average looks stable.
- Ignoring fees and taxes: Account fees, fund expenses, and taxes can reduce the amount you actually keep.
- Mixing APR and APY: A quoted APY already reflects compounding, while this calculator asks for an annual rate and compounding frequency.
- Forgetting inflation: A larger future dollar amount may not buy as much if prices rise over the same period.
Sources and further reading
For independent context, see Investor.gov's compound interest calculator and Investor.gov's glossary definition of compound interest. Those resources explain the same core idea: earnings can generate additional earnings when they remain in the account.