How to use this calculator
- Enter your Initial deposit, the amount you start with (use 0 if you start from nothing).
- Set the Monthly contribution you plan to add every month.
- Enter the Annual interest rate you expect and the number of Years.
- Pick the Compounding frequency, then read Future balance, Interest earned and the yearly table.
What compound interest is
With compound interest, interest is added to your balance and then earns interest itself. In the early years growth is mostly your own deposits. Later, the interest on past interest becomes the larger part, which is why time matters more than almost any other input.
FV = P · (1 + r/n)^(n·t) + PMT · [((1 + r/n)^(n·t) − 1) ÷ (r/n)] (monthly compounding)- FV = future balance
- P = initial deposit
- PMT = monthly contribution
- r = annual interest rate as a decimal (6% = 0.06)
- n = compounding periods per year (12 for monthly)
- t = number of years
The calculator adds your contribution at the end of each month. The effective annual rate shown in the results is the true yearly growth after compounding.
Example: $5,000 plus $300 a month for 25 years
Start with $5,000, add $300 every month and earn 6% compounded monthly for 25 years. The calculator gives a future balance of $230,223. You contributed $95,000 in total, so $135,223 is interest, more than you put in yourself. The effective annual rate is 6.17%.
The same plan with annual compounding ends at $224,346, about $5,900 less. Compounding frequency matters, but far less than the rate or the time you give it.
Which input moves the result most
Using the same example, change one thing at a time. Raising the contribution from $300 to $400 a month lifts the balance to $299,522. Dropping the rate from 6% to 5% cuts it to $196,059. Keeping the original plan running ten more years, to 35, produces $468,031.
Ten extra years added more than $237,000, while $100 extra a month for 25 years added about $69,000. Starting early, and not interrupting the plan, usually beats trying to pick a slightly higher rate.
Using the result to decide
Compare the interest line with total contributions to see when your money starts doing most of the work. To find the deposit needed for a specific target, use the savings goal calculator. To see how long a lump sum takes to double, try the Rule of 72 calculator.
Interest rates on savings accounts are set by the bank and can change, and investment returns are never guaranteed. Run the calculator with a cautious rate and a hopeful one, and plan around the cautious result.
Limits of this calculator
The projection assumes a constant rate, contributions that never change and no withdrawals. It does not subtract taxes, fees or inflation. A balance of $230,223 in 25 years will buy less than that amount does today, so check the real value with the inflation calculator.
Real investments rise and fall, so the actual path will be bumpy even if the average matches your input. For a fixed-rate savings product, compare offers using the APY calculator.
Frequently asked questions
What is the difference between compound and simple interest?
Simple interest is paid only on the original amount. Compound interest is paid on the original amount plus all interest already added, so growth accelerates over time.
How often should interest compound?
More frequent compounding earns slightly more. Moving from annual to monthly on a 6% rate lifts the effective yield from 6.00% to 6.17%, so the rate itself matters more.
Can I leave the monthly contribution at zero?
Yes. The calculator then shows how a single deposit grows on its own, which is useful for a CD or a one-off investment.
What interest rate should I assume?
Use a rate you could realistically earn on the product you have in mind, and test a lower one as well. Savings account rates change, and investment returns vary from year to year.
Does the calculator include taxes or inflation?
No. Interest and investment gains may be taxable, and inflation reduces what the final balance can buy, so treat the result as a before-tax, nominal figure.