Compound Interest Calculator
Calculate compound interest with monthly contributions. See how your money grows over time with different compounding frequencies and rates.
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Future Value
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Total Contributions —
Interest Earned —
How to Use This Calculator
- Enter your Initial Principal — the starting amount you are investing.
- Set a Monthly Contribution — even small regular deposits make a big difference.
- Enter the Annual Interest Rate — use expected returns for your investment type.
- Set the Time Period in years to see long-term growth.
- Choose a Compound Frequency — monthly is standard for most savings accounts.
Formula
Compound Interest Formula:
A = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) − 1] / (r/n)
- A = Future value
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Compounding periods per year
- t = Time in years
- PMT = Regular contribution per period
Example
Example: $10,000 initial investment, $200/month, 7% annual return, 20 years, monthly compounding.
- Total Contributions: $10,000 + ($200 × 240) = $58,000
- Interest Earned: $91,860
- Future Value: $149,860
- Your money grew by 2.58× what you put in.
Frequently Asked Questions
- Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This "interest on interest" effect causes investments to grow exponentially over time.
- More frequent compounding leads to slightly higher returns. Daily compounding yields marginally more than monthly, which yields more than annual. The difference becomes more significant with larger amounts and longer periods.
- The Rule of 72 estimates how long it takes to double your money: divide 72 by the annual interest rate. At 7% annual return, your investment doubles in approximately 72 ÷ 7 = 10.3 years.
- The US stock market (S&P 500) has historically returned about 10% annually before inflation, or about 7% after inflation. Bonds average 3–5%. Your actual return depends on asset allocation and market conditions.
- Regular contributions dramatically accelerate wealth accumulation. Contributing $200/month at 7% for 30 years grows to over $227,000 from just $72,000 in contributions — thanks to compound growth.