Compound Interest Calculator
Compound interest means you earn returns on your past returns, not just your original deposit. Over years, this snowball effect dwarfs simple saving. Enter a starting amount, a monthly contribution, and an expected annual return to project your balance.
Note: Projections assume a constant return, which real markets do not provide. This is illustrative, not financial advice.
How this calculator works
Compound interest grows your money in two ways at once: your original deposit earns a return, and then those returns earn returns of their own. This calculator compounds monthly, so each month a twelfth of the annual rate is applied to your running balance, and it also adds your regular monthly contribution before compounding the next month. Over many years the contributions and the compounding feed each other, which is why the final balance is far larger than the total you actually paid in.
Worked example
Start with $1,000, add $200 every month, and assume a 7% annual return over 20 years. You personally pay in $1,000 plus $200 x 240 months = $49,000. But thanks to compounding the projected balance is roughly $108,000 — more than double your contributions, with the difference being growth on growth.
Frequently asked questions
What return rate should I assume?
A broad stock market index has historically returned around 7% a year after inflation over the long term, but returns vary widely year to year and are never guaranteed. Use a conservative figure if you want a cautious estimate.
Does this account for inflation?
No. The projected balance is in today's nominal terms. To estimate buying power in the future, use a return rate reduced by your expected inflation rate.
Is monthly compounding realistic?
It is a reasonable approximation for most savings and investment accounts. Some accounts compound daily or annually, which changes the result only slightly over long periods.