How to use the compound interest calculator
The calculator starts with a worked example: $10,000 invested now, $200 added every month, 7% a year compounded monthly, for 20 years. Replace any input with your own numbers.
- Initial deposit: the amount you start with. Enter 0 if you are starting from nothing.
- Regular deposit and frequency: what you add each month, week or year. Enter 0 for a single lump sum.
- Annual interest rate and compounding: the stated rate and how often interest is added. Savings accounts usually compound daily or monthly; for an investment, use the average yearly return you expect and annual compounding.
- Years: how long the money stays invested.
- Deposit timing: whether deposits go in at the start or the end of each period. Start-of-period deposits earn one extra period of interest.
- Yearly increase and inflation are optional. A yearly increase raises your deposits each year; inflation converts the result into today’s money.
The bar chart shows what the balance is made of each year. The green part is interest; watch it grow from a thin line into the largest part of the bar. The table underneath gives the exact figures year by year.
The compound interest formula
For a single deposit, compound interest follows one formula:
Regular deposits add a second part, the future value of an annuity. Each deposit compounds for a different length of time, and the sum of all of them is:
When deposits and compounding happen at different frequencies (for example monthly deposits into an account that compounds daily), the calculator converts the annual rate into the equivalent rate for each deposit period, so both parts of the formula stay consistent.
A worked example
You invest $10,000 and add $200 a month for 20 years at 7%, compounded monthly.
You deposit $58,000.00 in total. The account ends at $144,572.72, so $86,572.72 of the final balance is interest, 59.9% of the total.
With monthly compounding, the stated 7% is worth an effective 7.23% a year. At 2.5% inflation, the final balance would buy roughly what $88,228.53 buys today.
Without the monthly deposits, the same $10,000 would grow to $40,387.39. The regular deposits are what turn a modest starting sum into a meaningful balance; compounding is what makes those deposits worth much more than their face value.
Time matters more than the rate
The two inputs that change the result most are the number of years and the rate. Using the same deposits:
| Scenario | Final balance | Total deposits | Interest |
|---|---|---|---|
| 10 years at 7% | $54,713.58 | $34,000.00 | $20,713.58 |
| 20 years at 7% | $144,572.72 | $58,000.00 | $86,572.72 |
| 30 years at 7% | $325,159.17 | $82,000.00 | $243,159.17 |
| 20 years at 5% | $109,333.14 | $58,000.00 | $51,333.14 |
| 20 years at 9% | $193,668.89 | $58,000.00 | $135,668.89 |
Going from 20 to 30 years adds only $200 a month for ten more years, yet the final balance more than doubles. That is the practical lesson of compounding: the last years add the most, so starting early is worth more than almost any later effort.
Daily, weekly or monthly compounding: how much difference?
More frequent compounding pays interest on interest sooner, but the effect is small at normal interest rates. For $10,000 at 7% over 10 years:
| Compounding | Effective annual rate (APY) | Balance after 10 years |
|---|---|---|
| Annually | 7.00% | $19,671.51 |
| Quarterly | 7.19% | $20,015.97 |
| Monthly | 7.23% | $20,096.61 |
| Weekly | 7.25% | $20,128.05 |
| Daily | 7.25% | $20,136.18 |
| Continuously | 7.25% | $20,137.53 |
The jump from annual to monthly compounding is noticeable; beyond monthly, the gains are tiny. When you compare savings accounts, compare the APY, which already includes the compounding, rather than the stated rate.
Deposits at the start or the end of the period
A deposit made at the start of a month earns interest for that month; one made at the end does not. Switching the example to start-of-period deposits raises the final balance to $145,180.47. If your employer or bank moves money on payday at the start of the month, use the start setting.
Raising your deposits by 3% each year, roughly in line with pay rises, takes the example to $171,236.17 after 20 years.
What this calculator assumes
The calculation assumes a constant rate for the whole period and deposits made on schedule. Real investments do not work that smoothly:
- Investment returns vary. A stock portfolio might average 7% but return +25% one year and −15% the next. The order of good and bad years matters, especially when you are adding or withdrawing money.
- Fees and taxes reduce the effective rate. A 1% annual fee on a 7% return cuts the growth rate to about 6%, which over decades removes a large share of the final balance.
- Savings rates change. Variable-rate accounts move with central bank rates, so a quoted rate today may not hold for years.
Treat the result as a projection of what the stated assumptions produce, and test a lower rate as well as the one you hope for.