Compound Interest Calculator
Calculate future value with compound interest and monthly contributions.
Compound Interest measurements
Enter your values, then calculate.
Result
How to calculate compound interest
Compound interest is what makes a savings or investment account grow faster over time than simple addition would suggest — because each period's interest is calculated on a balance that already includes the interest from every period before it. This calculator projects that growth from a starting amount, an optional monthly contribution, and a monthly rate of return over a chosen number of months.
How the calculation works
Future value = P × (1 + r)^n + PM × (((1 + r)^n − 1) / r), where P is the starting amount, PM is the monthly contribution, r is the monthly rate (annual rate ÷ 1200), and n is the number of months. The first term grows your starting balance; the second term adds up the growth of every future monthly contribution.
Example
Start with $5,000, contribute $200/month, at an average 7% annual return (about 0.583% monthly) for 20 years (240 months): the projected balance comes out to roughly $126,500. Of that, $53,000 came from your own contributions ($5,000 start + $200×240) — the remaining roughly $73,500 is growth from compounding.
Frequently asked questions
What return rate should I use?
There's no single right answer — it depends on your account type and how the money is invested. A savings account might realistically use 1–5%, while a diversified stock portfolio has historically averaged closer to 7–10% before inflation over long periods, with significant year-to-year variation.
Does this account for taxes on the growth?
No, this shows pre-tax growth. In a taxable account, your actual balance will be somewhat lower once you account for taxes on interest, dividends, or realized gains; in a tax-advantaged account like a 401(k) or IRA, this projection is closer to your real outcome.
What if I want to model a lump sum with no ongoing contributions?
Enter $0 for the monthly contribution — the calculator will show pure compound growth on the starting amount alone.
Compound Interest Calculator
Future value = P × (1 + r)^n + PM × (((1 + r)^n − 1) / r), where P is the starting amount, PM is the monthly contribution, r is the monthly rate (annual rate ÷ 1200), and n is the number of months. The first term grows your starting balance; the second term adds up the growth of every future monthly contribution.
Let's understand your compound interest result.
Calculate a result above and this guide will help you interpret it using this calculator's own formula and explanation.
Pro Tips for Compound Interest
- Small differences in assumed annual return compound dramatically over decades — try the calculation at 6%, 7%, and 8% to see the realistic range rather than anchoring on one optimistic number.
- Starting contributions a few years earlier usually beats contributing more per month later, since early dollars compound over more total months.
- If your real account compounds monthly but quotes an APY, convert with r = (1+APY)^(1/12) − 1 for a more precise monthly rate instead of just dividing APY by 12.
Common Compound Interest Mistakes to Avoid
- Using a single long-term average return (like 10% for stocks) without acknowledging that real returns vary year to year — a projection is a planning estimate, not a guarantee.
- Forgetting to account for taxes or fees, which reduce your effective rate of return below the headline number, especially in a taxable account.
When to Use This Calculator
Compound interest is what makes a savings or investment account grow faster over time than simple addition would suggest — because each period's interest is calculated on a balance that already includes the interest from every period before it. This calculator projects that growth from a starting amount, an optional monthly contribution, and a monthly rate of return over a chosen number of months.