What this calculator does
Compound interest is interest paid on interest already earned. Over a year or two the difference from simple interest is minor; over decades it is the dominant force in the calculation. This calculator combines a starting balance with regular contributions and shows how much of the final figure came from your own money versus growth.
The compounding frequency matters less than most people expect. Moving from annual to monthly compounding at the same nominal rate adds a fraction of a percentage point to the effective return. The rate itself, the contribution size and the number of years do the real work.
The formula
The starting amount grows as a lump sum for the full term. Each contribution grows for whatever time remains after it is made, which is what the second term of the formula sums. The periodic rate i is the annual rate divided by the number of compounds per year.
| Term | Meaning |
|---|---|
| FV | Future value: the balance at the end of the term. |
| P | The starting amount, invested at the beginning. |
| PMT | The amount added each compounding period. |
| i | The rate per period: annual rate ÷ compounds per year ÷ 100. |
| N | Total number of periods: compounds per year × years. |
The inputs explained
| Field | What to enter |
|---|---|
| Starting amount ($) | What is already in the account today. Enter zero if you are starting from nothing. |
| Contribution each period ($) | The amount you add each period. This is per compounding period, so if you select monthly compounding, it is a monthly contribution. |
| Annual interest rate (%) | The annual rate of return before fees and tax. |
| Years | How many years the money stays invested. |
| Compounds per year | How often interest is credited and contributions are made. |
When to use it
Projecting a long-term savings plan
Enter what you have, what you can add each month and a realistic return. The interest earned line is the one worth watching: for terms beyond about fifteen years it typically overtakes the amount you contributed.
Comparing accounts with different compounding
Two accounts advertising the same rate but compounding monthly versus annually are not quite identical. Run both to see the actual difference before letting it influence a decision: it is usually smaller than the rate difference between providers.
Understanding why starting early matters
Halve the contribution but double the years and compare. The longer, smaller plan usually wins, because early contributions have the most time to compound. Time in the market is a larger lever than the amount contributed.
Setting realistic expectations
Try the same plan at 4%, 7% and 10%. The spread across those three is a fair picture of the uncertainty in any long-term projection, and a useful antidote to treating a single number as a forecast.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
What $10,000 plus $500 a month becomes
A common starting position, held at a 7% annual return with monthly compounding, over increasing terms.
| Years invested | Future value | Total contributed | Interest earned |
|---|---|---|---|
| 5 years | $49,972.70 | $40,000.00 | $9,972.70 |
| 10 years | $106,639.02 | $70,000.00 | $36,639.02 |
| 15 years | $186,970.62 | $100,000.00 | $86,970.62 |
| 20 years | $300,850.72 | $130,000.00 | $170,850.72 |
| 25 years | $462,290.03 | $160,000.00 | $302,290.03 |
| 30 years | $691,150.47 | $190,000.00 | $501,150.47 |
How the return rate changes a 20-year plan
Same contributions and term, different rates of return.
| Annual return | Future value | Interest earned | Growth multiple |
|---|---|---|---|
| 2% | $162,311.70 | $32,311.70 | 1.25× |
| 4% | $205,613.13 | $75,613.13 | 1.58× |
| 6% | $264,122.49 | $134,122.49 | 2.03× |
| 8% | $343,778.24 | $213,778.24 | 2.64× |
| 10% | $452,965.15 | $322,965.15 | 3.48× |
| 12% | $603,553.22 | $473,553.22 | 4.64× |
The effect of compounding frequency
A lump sum with no additions, so only the compounding frequency changes.
| Compounded | Future value | Interest earned |
|---|---|---|
| Annually | $17,908.48 | $7,908.48 |
| Half-yearly | $18,061.11 | $8,061.11 |
| Quarterly | $18,140.18 | $8,140.18 |
| Monthly | $18,193.97 | $8,193.97 |
| Daily | $18,220.29 | $8,220.29 |
Questions
Does this account for tax or fees?
No. Enter a net rate if you want an after-fee, after-tax projection: for example, if a fund returns 8% and charges 1% in fees, enter 7%. Tax treatment depends on your jurisdiction and account type.
Does it account for inflation?
No, the result is in nominal dollars. To see the projection in today’s purchasing power, subtract expected inflation from the return rate, or run the answer through the inflation calculator.
Are contributions made at the start or end of each period?
At the end of each period, which is the standard ordinary annuity convention and matches how most automatic transfers behave in practice.
What return rate should I assume?
There is no correct answer, only ranges. Cash and term deposits have historically sat low, diversified share portfolios considerably higher, and both vary by decade. Running several rates and looking at the spread is more honest than picking one.
Why does the growth multiple seem low on short terms?
Because most of your money has not been invested for long. On a five-year plan with monthly contributions, the average dollar has only been working for about two and a half years.
To find the contribution needed to hit a specific target, use the savings goal calculator. To compare nominal and effective rates, see APR to effective rate.