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Compound Interest Calculator
Updated Apr 2026
See how your money grows over time with compound interest. Enter an initial amount, a monthly contribution, and an annual rate to project your future balance.
Compound Interest Calculator
What is compound interest?
Compound interest is interest calculated on the initial principal and the accumulated interest of previous periods. It is famously described by Einstein as the "eighth wonder of the world" — and for good reason. Small amounts, left untouched over long periods, grow into substantial sums because each period's interest joins the principal and earns its own interest.
How to use this calculator
Enter four numbers:
- Initial investment — the lump sum you are starting with today
- Monthly contribution — what you plan to add every month
- Annual interest rate — what the account pays (0.5% for savings, 7% for typical stock portfolios)
- Years — how long the money stays invested
The calculator computes the future value month by month and shows you the growth curve on the chart.
The compound interest formula
The classic formula for compound interest with contributions is:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]
Where P is the principal, r is the annual rate, n is the compounding frequency, t is the number of years, and PMT is the monthly contribution. This calculator uses monthly compounding (n = 12).
Tips to maximize compound growth
- Start early. A 25-year-old who saves $200/month for 40 years beats a 35-year-old who saves $400/month for 30 years — because time matters more than amount.
- Reinvest dividends. If you are investing in stocks or funds, always reinvest dividends. Skipping reinvestment can cut your final balance by a third over decades.
- Avoid fees. A 1% annual fee over 40 years can consume 30% of your final balance. Prefer low-cost index funds.
- Be consistent. Irregular contributions hurt less than you might think — but the biggest gains come from never stopping.
Compound interest vs. simple interest
Simple interest only pays on the principal. If you put $10,000 in a 5% simple interest account for 10 years, you get $5,000 in interest — total balance $15,000.
Compound interest pays on principal and accumulated interest. That same $10,000 at 5% compounded monthly for 10 years becomes $16,470. The extra $1,470 is interest on interest.
Over longer periods and larger balances, the gap widens dramatically.