Compound Interest Calculator

How to use this calculator

Enter a starting amount, how much you plan to add each month, an assumed annual return, and the number of years. Choose how often returns compound. The calculator estimates the future balance and splits it into the money you put in and the interest earned on top.

Try a few assumptions rather than one. Lowering the return by a couple of points, or shortening the time frame, shows how sensitive the outcome is, especially to time.

How compound interest works

Compound interest is interest earned on both your original money and on the interest it has already earned. Over short periods the effect is small. Over long periods it can become the largest part of the balance, because each year’s growth is calculated on a larger total.

Contributions add a second engine: money you add early has the most time to compound, which is why starting sooner usually matters more than adding a little more later. The U.S. Securities and Exchange Commission’s Investor.gov explains this effect and offers its own compound interest calculator.

How the numbers are calculated

The starting amount grows at the assumed return, compounded at the frequency you choose. A contribution is added at the end of each month, and it then compounds for the remaining time. The future balance is the starting amount plus all contributions plus the interest earned on both. Interest earned is the future balance minus everything you put in (the starting amount plus total contributions).

Assumptions

• The return rate is the same every year. Real returns do not behave this way.
• Contributions are made at the end of every month, without interruption.
• No taxes or investment fees are deducted.
• Results are shown in nominal dollars and are not adjusted for inflation.
• Figures are rounded to whole dollars.

Limitations

• This is an educational estimate, not a prediction, guarantee, or individualized advice. All investing involves risk, including the possible loss of principal.
• Actual investment returns rise and fall from year to year, so a real balance can differ substantially from a constant-rate estimate.
• It does not model taxes, fund fees or expense ratios, or inflation, all of which affect what your money is really worth.
• Past performance does not guarantee future results.

Frequently asked questions

What return rate should I use?

The rate is your assumption, not a promise. People often reference long-run historical averages for a diversified portfolio, but no rate is guaranteed and future returns may be higher or lower. Testing a range (for example, a few points below your main assumption) is more useful than a single optimistic figure.

Is this the same as an investment calculator?

It is the core of one. Compound interest is the engine behind investment growth. A fuller investment calculator would also account for fees, taxes, and inflation, which this tool does not model. For the basics of investing, see Investing for Beginners.

Why does the interest become so large over long periods?

Because returns earn returns. The longer money stays invested, the more each year’s growth builds on the last. Time is usually the most powerful input in the calculator.

Does it account for inflation?

No. Results are in today’s nominal dollars, so a balance far in the future will not buy as much as the same number today.