Compound Interest Calculator
Calculate how your investments grow with compound interest over time. See yearly breakdowns, visualize wealth growth, and experiment with different contribution strategies.
Final Balance
$302,370.09
Total Contributions
$130,000
Total Interest Earned
$172,370.09
View Formula
A = P(1 + r/n)nt + PMT ((1 + r/n)nt - 1) / (r/n)
where P = principal, r = annual rate, n = compounding periods/year, t = years, PMT = monthly contribution adjusted to compounding periods
Frequently Asked Questions
How does compound interest work?
Compound interest is interest earned on both your initial principal and the accumulated interest from previous periods. This creates a snowball effect where your money grows faster over time. For example, $10,000 at 7% compounded monthly grows to $40,000+ after 20 years with $500 monthly contributions.
What compounding frequency should I choose?
More frequent compounding (daily or monthly vs. annually) yields slightly higher returns. Most savings accounts compound daily or monthly. The difference between daily and monthly compounding is small — typically less than 0.1% in effective annual yield.
How much should I invest monthly to reach my goal?
Use this calculator to experiment with different monthly contribution amounts. For a more precise answer, try our Savings Goal Calculator which calculates the exact monthly amount needed to reach a specific target.
Is this calculator accurate for retirement planning?
This calculator provides estimates assuming a constant rate of return. Real investments fluctuate year to year. For long-term retirement planning, also try our Retirement Savings Calculator which accounts for your current age, retirement age, and lifestyle spending.
Does this account for taxes or inflation?
No — this calculator shows nominal (pre-tax, pre-inflation) returns. To factor in inflation, use our Inflation Calculator. To estimate after-tax returns, multiply your expected return by (1 — your tax rate), or use our US Tax Calculator.