About the Compound Interest Calculator
Compound interest is the reason a savings account, CD, or long-term investment can grow faster over time than simple interest suggests. Each time interest is added to your balance, the next round of interest is calculated on a slightly larger amount.
Enter a starting balance, an optional monthly contribution, an annual interest rate, a time period, and how often interest compounds. The calculator shows your projected final balance, how much of it came from your own contributions, how much came from interest, and the effective annual rate (APY) for the compounding frequency you chose.
How It Works
The calculator converts your annual rate into a rate for each compounding period and applies it to your balance. When interest compounds more often, such as monthly or daily, the effective annual yield is slightly higher than the stated rate.
Monthly contributions are treated as deposits made at the end of each month. To combine monthly deposits with any compounding frequency, the calculator uses the monthly rate that is mathematically equivalent to your chosen compounding schedule. With no monthly contribution, the result matches the classic formula A = P(1 + r/n)nt exactly.
Results are shown year by year so you can see how interest becomes a larger share of the balance over time.
Formula
- Afinal amount
- Pinitial investment (principal)
- rannual interest rate as a decimal (7% = 0.07)
- ncompounding periods per year (1, 2, 4, 12, or 365)
- tnumber of years
- Cmonthly contribution
- iequivalent monthly rate
- mnumber of monthly contributions (12 × years)
Final balance = lump-sum growth + growth of monthly contributions. Total interest = final balance − total contributions.
Example
Suppose you open a brokerage or high-yield savings account with $10,000, add $200 every month, and earn 7% a year compounded monthly for 10 years.
Inputs
- Initial investment
- $10,000
- Monthly contribution
- $200
- Annual rate
- 7.00%
- Period
- 10 years, monthly
Results
- Final balance
- $54,713.58
- Total contributions
- $34,000.00
- Interest earned
- $20,713.58
- APY
- 7.23%
Without the monthly contributions, the same $10,000 would grow to about $20,096.61. Compounded annually instead of monthly, it would grow to about $19,671.51.
Understanding Your Results
- Final Balance: Your projected account value at the end of the period, before taxes and fees.
- Total Contributions: Your initial investment plus every monthly contribution. This is the money you put in.
- Total Interest Earned: The growth that came from interest, including interest earned on earlier interest.
- Effective Annual Rate (APY): The true yearly growth rate after compounding. It is higher than the stated rate whenever interest compounds more than once a year.
- Growth on Contributions: Total interest as a percentage of what you contributed.