Enter your starting balance, optional monthly contribution, annual interest rate, and how long you'll let it grow. You'll get the future value, how much of it you contributed, and how much is pure interest — plus a year-by-year table.
How compound interest works
With simple interest, you earn interest only on what you put in. With compound interest, each period's interest joins the balance, and the next period's interest is calculated on that bigger number. Early on the difference looks small; over decades it's the difference between a savings account and a retirement.
A = P × (1 + r/n)n·t + contributions compounded each period
P is your starting balance, r the annual rate as a decimal, n compounding periods per year, and t the number of years. This calculator adds your monthly contributions into the simulation month by month, which is how real accounts behave.
Worked example
$10,000 starting balance, $200/month added, 5% compounded monthly, for 10 years:
The lump sum alone grows to about $16,470. The contributions add $24,000 of deposits which grow to about $31,056. Total: roughly $47,527 — of which about $13,527 is interest you never had to deposit.
The two levers that matter most
People agonize over compounding frequency, but daily vs. monthly compounding changes the outcome by well under 1%. The levers that actually move the result are time (compounding is exponential — the last 10 years of a 30-year horizon typically generate more interest than the first 20 combined) and rate. That's why starting early beats starting big: $200/month from age 25 usually out-grows $400/month from age 40.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on interest. Each period, interest is calculated on your full balance — including previously earned interest — so growth accelerates over time rather than staying linear like simple interest.
What's the compound interest formula?
For a lump sum: A = P × (1 + r/n)^(n×t), where P is the principal, r the annual rate as a decimal, n the number of compounding periods per year, and t the years. Regular contributions are added on top each period, which is what this calculator simulates month by month.
How much difference does compounding frequency make?
Less than most people expect. $10,000 at 5% for 10 years grows to $16,289 compounded annually versus $16,470 compounded monthly — about 1% more. The rate and the time horizon matter far more than the frequency.
What is the Rule of 72?
A quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes money to double. At 8%, money doubles in roughly 72 ÷ 8 = 9 years.
Does this calculator account for taxes or inflation?
No — results are gross growth. Interest is typically taxable outside of tax-advantaged accounts, and inflation reduces real purchasing power. A common rough adjustment is to subtract expected inflation (historically ~2–3%) from your rate to see growth in today's dollars.