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Compound Interest Calculator

See how savings grow when interest starts earning interest.

How the calculator works

For the lump sum, the calculator raises the per-period growth factor (1 + rate ÷ periods per year) to the power of the total number of periods, which is the textbook compound-interest formula. Monthly contributions are modeled as an ordinary annuity: each deposit earns the monthly-equivalent rate from the month it is made until the end of the term, and the standard annuity formula collapses all of those deposits into one figure that is added to the compounded principal. The table recomputes the balance at the end of each year so you can watch the interest column widen — the signature of compounding. Because the model is deterministic, treat results as a projection, not a guarantee: real accounts have taxes, fees, and variable rates.

Formula

FV = P × (1 + i)N + PMT × ((1 + i)N − 1) ÷ i

Where:

  • P — the initial principal
  • i — the periodic rate (annual rate ÷ periods per year)
  • N — the total number of compounding periods
  • PMT — the monthly contribution (0 if none)

Example

Deposit $1,000 at 5% compounded monthly for 10 years with no extra contributions and the balance reaches about $1,647.01 — a 65% gain from interest alone. Add just $100 per month and the same account ends near $17,175.24: $13,000 deposited and $4,175.24 earned in interest. Extend the horizon to 25 years and the interest column overtakes the deposits — that crossover is the entire promise of compounding.

Frequently Asked Questions

Which compounding frequency is best?
At the same nominal rate, more frequent compounding yields slightly more: 5% compounded monthly beats 5% compounded annually because each month's interest starts earning sooner. The difference is small at low rates but grows with both the rate and the time horizon.
Is the result before or after tax?
Before tax. Interest income is usually taxable, and the rate and timing vary by country and account type. Enter an after-tax equivalent rate if you want a conservative projection.
What is the difference between this and the savings calculator?
They share the math, but the savings calculator is built around a goal: it also tells you how long it will take to reach a target balance. Use this one for open-ended projections and the savings calculator when you have a specific figure in mind.
Does inflation matter here?
Yes — future money buys less. A common adjustment is to subtract expected inflation from the rate (a 5% return with 2% inflation behaves like 3%). The nominal figure shown here is still the correct amount that will sit in the account.

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