Compound Interest Calculator

1. Enter your Initial Investment. This is the lump sum you start with today. You can start with $0 and use only monthly contributions if you're beginning from scratch.
2. Set a Monthly Contribution. Regular deposits accelerate growth significantly, often more than a larger starting balance. Set to $0 if you want to model a one-time lump sum only.
3. Enter the Annual Interest Rate. For savings accounts, use your current APY. For investments, the S&P 500 has averaged about 10% annually before inflation, or about 7% after inflation over the long term. Be conservative with projections.
4. Set the Investment Period in years. The difference between 20 years and 30 years at the same rate is often more than doubling your final balance.
5. Choose Compound Frequency. Daily compounding produces slightly more than monthly, which produces slightly more than annually. For most savings accounts and index funds, monthly is a reasonable default.
6. Read the year-by-year table to see exactly when interest earnings start to exceed your contributions. That crossover point is when compounding really starts doing the heavy lifting.

Compound interest earns returns on both your original principal and all previously accumulated interest. That's the key difference from simple interest, which only applies to the original amount. Over long periods, this creates massive differences in outcomes.

Lump sum:  A = P × (1 + r/n)^(n×t)

With contributions:
  FV = PMT × [(1 + r/n)^(n×t) - 1] / (r/n)

• A = final balance
• P = starting amount (principal)
• r = annual rate as a decimal (7% = 0.07)
• n = compounding periods per year (12 = monthly, 365 = daily)
• t = time in years
• PMT = regular contribution per period

Worked example: $10,000 at 7% compounded monthly for 30 years:

A = 10,000 × (1.005833)^360 = $81,165

Add $200/month → total grows to $227,000
Interest earned alone: $143,000

The $143,000 in interest came from money earning money, compounding month after month. That's why starting early matters far more than the size of contributions.

The most counterintuitive fact about compound interest is that time matters more than amount. Here's a concrete comparison at 7% annual return:

Someone who invested for only 10 years starting at 25 ends up with nearly the same balance as someone who invested for 30 years starting at 35, despite putting in 3x less money. That's compounding at work. The early investor's money had 30 more years to grow, even though they stopped adding to it.

For retirement projections over 20 to 30 year horizons, use our retirement calculator which accounts for inflation and withdrawal rates. To see how regular savings grow alongside compound interest, the savings calculator models monthly deposits with bank account rates.