Compound Interest Calculator
See how your money grows with compound interest and regular contributions.
Final balance
$54,714.00
- Total contributed$34,000.00
- Interest earned$20,714.00
- Return60.9%
| Year | Balance |
|---|---|
| 1 | $13,201.00 |
| 2 | $16,634.00 |
| 3 | $20,315.00 |
| 4 | $24,262.00 |
| 5 | $28,495.00 |
| 6 | $33,033.00 |
| 7 | $37,900.00 |
| 8 | $43,118.00 |
| 9 | $48,714.00 |
| 10 | $54,714.00 |
This compound interest calculator grows a starting balance at a fixed rate, with optional monthly contributions, and shows the split between what you put in and what the growth adds. Compounding can be monthly, quarterly, or annual.
Compounding is the reason a 7% return doubles money in about ten years without anyone doing anything. It is also the reason a 24% credit card balance is nearly impossible to repay at the minimum. Below: the formula, the frequency effect, and a contribution table that shows when the growth starts to outweigh the deposits.
How to calculate compound interest
- Convert the annual rate to the compounding period: 7% / 12 = 0.005833 per month.
- Raise (1 + rate) to the number of periods: 1.005833^120 = 2.0096 for ten years.
- Multiply the starting balance: 10,000 × 2.0096 = $20,096.
- Add the contributions with the future-value-of-annuity factor: 200 × (2.0096 − 1) / 0.005833 = $34,616.
- Total: $54,712, of which $34,000 is money you paid in and $20,712 is growth.
Example
$10,000 at 7% compounded monthly, plus $200 a month for ten years, ends at about $54,700. You contributed $34,000; compounding produced the other $20,700. Stop contributing after ten years and let it sit another twenty at the same rate, and the balance reaches roughly $217,000.
Compound interest formula
FV = P(1 + r/n)^(nt) + PMT × ((1 + r/n)^(nt) − 1) / (r/n), with r = annual rate, n = compounds per year, PMT = contribution per period.
How to use this calculator
- Enter the starting balance — zero is fine if you are starting from scratch.
- Set the annual rate and the number of years. The rate is nominal; the compounding field controls how often it is applied.
- Add a monthly contribution if you are saving regularly. Leave it at zero to see pure compounding.
- Read the chart for the crossover point where growth exceeds contributions — usually in the second half of the term.
Compounding frequency
More frequent compounding means a slightly higher effective rate. $10,000 at 7% for one year gives $10,700 annual, $10,722.90 monthly, and $10,725.00 daily. The gap is small over a year but multiplies: the difference between annual and monthly compounding on a 30-year balance is several percent of the final value.
The rule of 72
Divide 72 by the annual return to get the approximate doubling time: 72 / 7 ≈ 10.3 years. It is accurate to within a few percent for rates between 4% and 15%, and it works in reverse for inflation — at 3%, prices double in about 24 years.
Contributions vs. growth
Early on, deposits dominate. Later, growth does. The table is $10,000 at 7% monthly plus $200 a month.
| After | Balance | You paid in | Growth |
|---|---|---|---|
| 5 years | $28,494 | $22,000 | $6,494 |
| 10 years | $54,712 | $34,000 | $20,712 |
| 20 years | $144,540 | $58,000 | $86,540 |
| 30 years | $325,140 | $82,000 | $243,140 |
At 30 years, growth is three times the money you contributed.
What this calculator leaves out
Taxes on interest and dividends, fund fees, inflation, and the fact that returns are not smooth. A 7% average with a 30% drawdown in the middle still ends at the same place mathematically, but few investors stay the course through it.
Common mistakes
- Confusing APR with APY. A 7% nominal rate compounded monthly is 7.23% effective.
- Adding the rate times the years instead of compounding. 7% for ten years is not 70% — it is 97%.
- Ignoring fees. A 1% annual fee on a 7% return removes roughly a quarter of the final balance over 30 years.
FAQ
What is compound interest?
Interest that is added to the balance and then earns interest itself. Simple interest pays only on the original principal, which is why the two curves separate so sharply over time.
How long does it take to double my money?
About 72 divided by the annual return. At 7% that is roughly 10 years; at 10%, about 7 years; at 3%, about 24 years.
Does compounding monthly beat compounding annually?
Yes, but only slightly. $10,000 at 7% for a year is $10,700 annually and $10,722.90 monthly — 0.2% more. Over decades the gap becomes meaningful.
How much do I need to save monthly to reach $1 million?
At 7% over 30 years, about $850 a month with no starting balance. Over 40 years, about $400. Starting earlier matters more than the amount.
What rate of return should I assume?
A diversified stock portfolio has historically returned about 7% a year after inflation, but with large swings. Use 5–7% for planning and test a lower number to see whether the plan still works.
Does compound interest work against me on debt?
Yes, and faster. A 24% credit card compounds monthly, so an unpaid $5,000 balance grows to $6,350 in a year with no payments. Debt compounding is the same formula with the sign flipped.
What is continuous compounding?
The limit of more and more frequent compounding: FV = P × e^(rt). At 7% for ten years, continuous compounding gives 2.0138× against 2.0096× for monthly — a tiny difference.