Compound Interest Calculator
Enter your starting amount, monthly contribution, expected return, and time horizon to see how far compounding can grow your money. Figures assume monthly compounding with contributions added at month end.
How it works
The formula in plain words
Compound growth follows FV = P × (1 + r)^t: your starting amount P grows by the return rate r, and each year the gain is calculated on the new, larger balance — so you earn returns on your past returns. When you also add money regularly, this calculator layers a monthly contribution on top, growing every payment by (annual return ÷ 12) until the end of the term.
A worked example
Put $1,000 in at a 7% annual return and leave it untouched for 10 years. After year one it is $1,070. In year two the 7% is charged on $1,070, not on the original $1,000, giving $1,144.90. Repeat that ten times and you reach about $1,967 — your money nearly doubles, and most of the later growth comes from interest on earlier interest rather than from your original deposit.
Key caveats
- The return rate is an assumption, not a promise; real markets rise and fall and some years are negative.
- Results are nominal — inflation quietly erodes what the final figure can actually buy.
- Fees and taxes are ignored here, and both reduce real-world outcomes.
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Frequently Asked Questions
How is compound interest calculated here?
This calculator uses monthly compounding: your starting amount and each monthly contribution grow by (annual return ÷ 12) every month.
Is a 7% return realistic?
It is a common rough assumption for long-run stock markets, but not a guarantee. Real returns vary every year and some years are negative.
Does compounding frequency change the result much?
Less than people expect. At the same annual rate, the difference between monthly and yearly compounding is small.
What is the difference between compound and simple interest?
Simple interest pays the same amount every year on your original deposit only. Compound interest pays on the growing balance, so it accelerates over time and pulls far ahead over long horizons.
How long does it take to double my money?
A quick shortcut is the Rule of 72: divide 72 by the annual return. At 7% that is about 10 years to double, which matches the worked example above.
Does this calculator include inflation, taxes, or fees?
No. The figures are nominal and before costs. Inflation reduces what the final amount can buy, while taxes and fees lower the balance you actually keep, so treat the result as an optimistic ceiling.
This calculator is an educational estimate, not individual investment advice. It does not account for taxes, fees, or inflation.