Compound Interest Calculator
Watch your money grow — project compound growth with monthly deposits, any rate, and any timeframe.
Watch your money grow
How many times per year interest is added. You can type a number or a formula.
| Year | Balance |
|---|---|
| 1 | $7,839.97 |
| 2 | $10,885.24 |
| 3 | $14,150.65 |
| 4 | $17,652.12 |
| 5 | $21,406.71 |
| 6 | $25,432.72 |
| 7 | $29,749.77 |
| 8 | $34,378.90 |
| 9 | $39,342.67 |
| 10 | $44,665.27 |
| 11 | $50,372.64 |
| 12 | $56,492.60 |
| 13 | $63,054.97 |
| 14 | $70,091.74 |
| 15 | $77,637.19 |
| 16 | $85,728.11 |
| 17 | $94,403.92 |
| 18 | $103,706.90 |
| 19 | $113,682.40 |
| 20 | $124,379.03 |
The Compound Interest Formula Explained
Compound interest is interest earned on both your original money and the interest it has already earned. The formula looks intimidating, but each piece is simple:
A = P(1 + r/n)nt + PMT × [((1 + r/n)nt − 1) ÷ (r/n)]
- P — your starting amount (principal)
- PMT — what you add each month
- r — the annual interest rate (as a decimal)
- n — how many times per year interest compounds
- t — years
The first half grows your starting lump sum; the second half grows every monthly deposit from the day it lands. Einstein probably never called it "the eighth wonder of the world" — the quote is apocryphal — but the math genuinely deserves the hype: growth accelerates because each year's gains become next year's principal.
Why Monthly Deposits Change Everything
A lump sum compounds nicely. A lump sum plus steady deposits compounds ferociously. Here's why: every $200 you add doesn't just sit there — it starts earning its own interest immediately, and that interest earns interest, for every remaining month.
Compare $5,000 invested once at 7% for 20 years: it grows to about $20,127. Now add $200/month: the balance reaches $124,379. You contributed $53,000 total — meaning $71,379 (57% of the final balance) is pure growth. The deposits did the heavy lifting early; compounding did it late. In the final years, the account earns more per year in interest than you contribute.
This is the entire philosophy behind 401(k)s and index-fund investing: you can't control the market's returns, but you can control showing up every month. Automate the deposit and let time do what timing can't.
Worked Example: $200/Month for 20 Years
The setup
$5,000 starting balance, $200 added monthly, 7% annual rate compounded monthly, 20 years.
Step 1 — Monthly rate
7% ÷ 12 = 0.5833% per month, over 240 months.
Step 2 — Grow the principal
$5,000 × (1.005833)240 = $5,000 × 4.0387 = $20,193.69.
Step 3 — Grow the deposits
$200 × [((1.005833)240 − 1) ÷ 0.005833] = $200 × 520.93 = $104,185.33.
Step 4 — Total
$20,193.69 + $104,185.33 = $124,379.02. Contributions: $53,000. Interest: $71,379.03.
Try changing the years to 30 in the calculator above and watch what happens — a few extra years at the end are worth more than the entire first decade.
Compounding Frequency: Daily vs Monthly vs Annual
How often interest compounds does matter — just less than you'd think. On $10,000 at 7% for 10 years:
| Compounds | Final balance | Extra vs annual |
|---|---|---|
| Annually | $19,671.51 | — |
| Quarterly | $20,015.97 | +$344.46 |
| Monthly | $20,096.61 | +$425.10 |
| Daily | $20,136.18 | +$464.67 |
Daily beats annual by about 2.4% over a decade — nice, not life-changing. The far bigger levers are the rate, the monthly deposit, and especially the time. Never pick an investment for its compounding frequency; pick it for its return and its fees.
The Real Secret: Start Early
Two savers, same 7% return, same $200/month. Ana starts at 25 and stops at 35 (10 years, $24,000 in). Ben starts at 35 and invests until 65 (30 years, $72,000 in). At 65, Ana's early money — growing untouched for 30 more years — is worth about $281,000. Ben's three decades of diligent saving: about $244,000. Ana contributed one-third as much ($24,000 vs $72,000) and still came out ahead, because her money had the one thing Ben's didn't: time.
You can't go back and start at 25. But you can start today — and every month you wait is the most expensive month, because it's the one with the longest compounding runway. Enter your numbers above, look at the year-by-year table, and notice how the curve bends upward. That bend is the whole game.
The Three Levers, Ranked by Power
Not all inputs matter equally. Here's the honest ranking:
- Time (most powerful). Doubling your timeframe more than doubles your result, because compounding is exponential. Ten extra years at the end beats ten extra years at the start — the curve is steepest where the balance is biggest.
- Monthly contribution. This one is linear and fully in your control. Doubling your deposit roughly doubles your outcome. Boring, reliable, unbeatable.
- Rate of return. Powerful but partly out of your hands — and chasing an extra 1% by taking wild risks often backfires. A steady 7% you actually stick with beats a theoretical 10% you abandon in the first crash.
Notice what's last: compounding frequency. As the table above showed, daily vs annual is a ~2% difference over a decade. It's the garnish, not the meal.
Common Compound Interest Mistakes
- Waiting for "the right time." There isn't one. The math rewards the earliest dollar, not the smartest-timed dollar.
- Raiding the account. Every withdrawal doesn't just remove money — it removes all the future compounding that money would have done. A $5,000 withdrawal at 30 can cost $50,000+ at 65.
- Ignoring fees. A 1% annual fee on a 7% return doesn't cost you 1% — it costs you roughly a third of your final balance over 30 years, because fees compound against you exactly like returns compound for you.
- Forgetting inflation. 7% nominal with 3% inflation is ~4% real. Your purchasing power still grows beautifully — just calibrate expectations with the real number.
My saved numbers reuse them in any calculator
Save a number once — like your rent or hourly rate — then just type its name instead of the number, in any calculator here. You can also type formulas like 5000 * 1.1 right into any box.
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Frequently Asked Questions
How does compound interest work?
Compound interest means you earn interest on your original money plus all previously earned interest. Each period, your balance grows by the rate — and the next period applies the rate to that larger balance, so growth accelerates over time.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is the principal, r the annual rate, n the compounding periods per year, and t the years. With regular deposits, add PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)] for the contribution portion.
How much will $10,000 grow in 10 years?
At 7% compounded monthly, $10,000 grows to about $20,097 in 10 years — roughly doubling. At 5% it becomes about $16,470; at 10% about $27,070. Time and rate are the two biggest drivers.
Is monthly or annual compounding better?
Monthly compounding is slightly better: on $10,000 at 7% for 10 years, monthly gives about $20,097 versus $19,672 annually — a $425 difference. The gap is real but small compared to the effects of rate, deposits, and time.
What is a realistic annual return rate?
The US stock market has averaged about 10% nominal (7% after inflation) over the long run, but with big swings year to year. High-yield savings accounts pay around 4–5% APY with no risk. Use 6–8% for long-term stock planning and 4–5% for safe cash — and remember past returns never guarantee future ones.