Compound Interest Calculator
See how an investment grows over time with compound interest and monthly contributions. Get the future value, total invested and interest earned.
Optional
Compounded monthly. The rate is applied as an annual rate divided across 12 months.
How it works
Compound interest is interest earned on interest. Unlike simple interest, which is calculated only on the original amount, compound interest is added to the balance and, from then on, earns interest itself. Over time, that snowball effect makes the money grow faster and faster.
You enter an initial amount, an optional monthly contribution, an annual interest rate and a period in years. The tool compounds monthly and returns three figures: the future value (what you'll have at the end), the total invested (what you actually put in) and the interest earned (the difference — the money the interest generated).
The core formula applies the rate repeatedly to the growing balance, and the monthly contributions are added along the way, each one also earning interest for the remaining time. That's why starting early and contributing regularly makes such a difference.
When to use
This calculator is useful for planning any long-term saving or investing goal. Seeing how a monthly contribution grows over the years helps set realistic targets and understand the impact of time and the interest rate on the final result.
It's ideal for comparing scenarios: what changes if you contribute a little more each month, if you start five years earlier, or if the rate is slightly higher. Those comparisons make the power of compounding tangible and often motivate better financial habits.
Practical examples
The power of time
Starting with $1,000, adding $100 a month at 8% per year for 10 years grows to well over $18,000 — even though you only put in about $13,000. The rest is interest earning interest.
Starting earlier
Keeping the same contribution but extending the period from 10 to 20 years doesn't just double the result — it grows far more, because the later years benefit from a much larger accumulated balance.
Common mistakes
The most common mistake is confusing the annual rate with the monthly rate. A rate of 8% per year is very different from 8% per month — and because of compounding, it isn't the same as simply dividing by twelve either. Entering the rate for the wrong period completely distorts the result. This tool takes an annual rate and compounds monthly.
Another misconception is expecting linear growth. Compound interest curves upward: the first years look modest, and the real acceleration comes later. Judging a long-term plan by its early results underestimates where it ends up.
There's also the habit of ignoring inflation and taxes. The calculator shows nominal growth; in real life, inflation reduces purchasing power and returns may be taxed. The result is an excellent basis for comparison, but the amount you actually keep depends on those factors.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original amount. Compound interest is added to the balance and then earns interest itself, producing faster, accelerating growth over time.
Should the rate be annual or monthly?
Enter the annual rate. The tool compounds monthly internally. If you only have a monthly rate, it needs to be converted to the equivalent annual rate first.
Does the calculator account for inflation?
No. It shows nominal growth. In real life, inflation reduces purchasing power over time, so the future value in today's buying power would be somewhat lower.
Why do the early years grow so little?
Because compound interest accelerates. Early on, the balance is small, so the interest is small too. As the balance grows, the interest grows with it — which is why time is such a powerful factor.