Compound Interest Calculator
See how your money grows over time with the power of compound interest. Plan savings, investments, and retirement with monthly contributions.
Final Balance
Total Contributions
Total Interest Earned
Interest as % of Final Balance
Growth Over Time
| Year | Starting Balance | Contributions | Interest | Ending Balance |
|---|
"What If" Rate Comparison
| Interest Rate | Final Balance | Total Interest | Difference |
|---|
Understanding Compound Interest
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is only calculated on the principal, compound interest causes your money to grow exponentially over time. This is why Albert Einstein reportedly called it "the eighth wonder of the world." The more frequently interest is compounded (daily vs. annually), the faster your investment grows. The exact month-by-month formula this calculator uses is shown further down this page.
The Rule of 72
The Rule of 72 is a quick mental math shortcut to estimate how long it takes for an investment to double. Simply divide 72 by the annual interest rate. For example, at 8% annual return, your money doubles in approximately 72 / 8 = 9 years. At 6%, it takes about 12 years. This rule works best for rates between 6% and 10%.
4%
~18 years
6%
~12 years
8%
~9 years
10%
~7.2 years
Simple vs Compound Interest
Simple interest earns the same fixed amount each period, while compound interest earns interest on your interest, creating a snowball effect. The longer your time horizon, the more dramatic the difference becomes.
| $10,000 at 8% (yearly) | Simple | Compound | Advantage |
|---|---|---|---|
| 5 years | $14,000 | $14,693 | +$693 |
| 10 years | $18,000 | $21,589 | +$3,589 |
| 20 years | $26,000 | $46,610 | +$20,610 |
| 30 years | $34,000 | $100,627 | +$66,627 |
The Power of Starting Early
Time is your most powerful asset when it comes to compound interest. Consider two investors who both contribute $300/month at an example 8% annual return, compounded monthly:
Investor A (starts at 25)
Invests for 40 years until age 65
Total contributed: $144,000
Final: ~$1,054,000
Investor B (starts at 35)
Invests for 30 years until age 65
Total contributed: $108,000
Final: ~$450,000
Investor A contributed only $36,000 more but ended up with about $604,000 more thanks to an extra decade of compounding.
How to use this compound interest calculator
- Enter a lump sum in Initial Investment / Principal. Use 0 if you will only make monthly deposits.
- Enter what you plan to add every month in Monthly Contribution.
- Type the yearly rate in Annual Interest Rate (%) — the annual figure, not a monthly one.
- Choose a Compounding Frequency: Daily, Monthly, Quarterly or Annually.
- Set the Investment Period (Years) and press Calculate Compound Interest. Results refresh when you press the button, not while you type.
- Read the Final Balance, Total Contributions and Total Interest Earned, open Year-by-Year Breakdown for the full table, and use the “What If” Rate Comparison, which reruns your inputs at 1 and 2 percentage points below and above your rate.
The calculation runs in your browser with JavaScript; the numbers you type are not sent to a server.
The exact formula behind the numbers
Many sites quote the textbook formula A = P(1 + r/n)nt, which only covers a single lump sum. Because your contributions arrive every month, this calculator works month by month instead. In each month it does two things, in this order: it adds the monthly contribution to the balance, then it multiplies the balance by a monthly growth factor g. Written as a closed formula:
g = (1 + r/n)n/12
Balance = P × gm + PMT × g × (gm − 1) / (g − 1)
P = initial investment, PMT = monthly contribution, r = annual rate as a decimal (7% = 0.07), n = compounding periods per year (Daily 365, Monthly 12, Quarterly 4, Annually 1), m = number of months (years × 12).
- With Monthly compounding, g is simply 1 + r/12. At 7% that is 1.00583333.
- With Quarterly, Annually or Daily, g is the monthly rate that is equivalent to that schedule (at 7%: 1.00579963 quarterly, 1.00565415 annually, 1.00584982 daily). A deposit starts growing in the month you make it, while a full year still matches the compounding you picked.
- Because deposits go in at the start of each month, every deposit gets one extra month of growth compared with an end-of-month calculator. That is why this tool can show a slightly higher figure than some other calculators.
Worked example: $500 a month for 10 years
Inputs: Initial Investment $0, Monthly Contribution $500, Compounding Frequency Monthly, 10 years. The rates 7% and 10% are example returns, not predictions. The method is identical to the calculator’s, so entering the same inputs gives the same Final Balance.
- At 7%: g = 1 + 0.07/12 = 1.00583333; g120 = 2.009661; Balance = 500 × 1.00583333 × (2.009661 − 1) / 0.00583333 = $87,047.23.
- At 10%: g = 1.00833333; g120 = 2.707041; Balance = $103,276.01.
You pay in $60,000 in both cases. Interest is $27,047.23 at 7% (31.1% of the final balance) and $43,276.01 at 10% (41.9%). Three extra percentage points of return add $16,228.78 over ten years.
| Year | Paid in | Balance at 7% | Balance at 10% |
|---|---|---|---|
| 1 | $6,000 | $6,232.44 | $6,335.14 |
| 2 | $12,000 | $12,915.42 | $13,333.65 |
| 3 | $18,000 | $20,081.51 | $21,065.00 |
| 4 | $24,000 | $27,765.65 | $29,605.92 |
| 5 | $30,000 | $36,005.26 | $39,041.19 |
| 6 | $36,000 | $44,840.52 | $49,464.45 |
| 7 | $42,000 | $54,314.49 | $60,979.17 |
| 8 | $48,000 | $64,473.32 | $73,699.63 |
| 9 | $54,000 | $75,366.54 | $87,752.08 |
| 10 | $60,000 | $87,047.23 | $103,276.01 |
Look at year 10 at 7%: the balance rises by $11,680.69, of which $6,000 is your own deposits and $5,680.69 is interest. In year 1 interest was only $232.44. That widening gap is compounding at work. Changing only the frequency for the same $500 a month at 7% gives $87,143.49 (Daily), $87,047.23 (Monthly), $86,850.87 (Quarterly) and $86,009.44 (Annually).
Rupee example: a Rs 10,000 monthly SIP
The calculator shows a $ sign and western commas, but the maths does not depend on currency. Type rupee amounts and read the result as rupees. This is useful for a monthly mutual fund plan in Pakistan or an SIP in India. Inputs: Initial Investment 0, Monthly Contribution 10,000, Monthly compounding. The rates are examples only.
| Period | Invested | At 8% | At 12% |
|---|---|---|---|
| 10 years | Rs 12,00,000 | Rs 18,41,657 | Rs 23,23,391 |
| 15 years | Rs 18,00,000 | Rs 34,83,451 | Rs 50,45,760 |
| 20 years | Rs 24,00,000 | Rs 59,29,472 | Rs 99,91,479 |
For 15 years at 12% the tool displays $5,045,760.00. In the Indian numbering system that is Rs 50,45,760, or about 50.5 lakh. After 20 years at 12% the value is just under Rs 1 crore (Rs 99,91,479) against Rs 24 lakh invested. To write such figures out for a cheque or document, use the number to words converter in lakh and crore.
Start-of-month deposits with monthly compounding give the same result as the widely used SIP formula FV = P × [((1 + i)n − 1) / i] × (1 + i), where i is the annual rate divided by 12. Shariah-compliant funds and profit-sharing accounts pay profit rather than interest, and their returns are not fixed. You can still project growth at an assumed profit rate, because the compounding maths is the same.
Mistakes that make an estimate misleading
- Treating an average return as guaranteed. Equity funds can fall in some years. A fixed-rate projection hides that, so use the “What If” table to see a range instead of a single number.
- Forgetting fees. A fund charging about 1% a year turns an example 7% into roughly 6%. Over 20 years, $500 a month then reaches $232,175.55 instead of $261,982.70.
- Mixing up nominal and real returns. The result is in future money. Enter (1 + return) / (1 + inflation) − 1 as the rate to see today’s purchasing power.
- Typing a monthly rate into the annual box. 1% a month is not the same as 1% a year. The field expects the yearly rate.
- Comparing calculators with different rules. Month-end deposits or annual compounding produce smaller figures. Check both settings before deciding which result is “right”.
For help choosing a realistic rate and time horizon, read our compound interest investment guide. When you borrow, the same compounding works against you. See how it adds up on a loan with the loan calculator or on a home loan with the mortgage calculator.
Estimates only, not financial advice. Results assume a constant rate and exclude fees, taxes and inflation. Actual returns will differ.
Frequently Asked Questions
How much will I have if I invest $500 a month for 10 years?
You pay in $60,000 in total. With each deposit made at the start of the month and monthly compounding (the method this calculator uses), an example 7% annual return grows that to $87,047.23 and an example 10% return to $103,276.01. Real investments do not earn a fixed rate every year, so treat these as illustrations, not forecasts.
How much interest will I earn on $500,000 in a year?
It depends entirely on the rate. At an example 5% a year compounded monthly, $500,000 earns $25,580.95 in the first year (about $2,083 in the first month), and at an example 7% it earns $36,145.04. With yearly compounding the 5% figure is exactly $25,000, and with daily compounding it is $25,633.75.
Does the S&P 500 compound monthly?
No. An S&P 500 index fund has no fixed compounding schedule: its price moves every trading day, its dividends are usually paid quarterly, and growth only compounds if those dividends are reinvested. The frequency you pick in this calculator is a smoothing assumption; for $500 a month at an example 7% over 10 years, Monthly gives $87,047.23 and Annually gives $86,009.44, a gap of about $1,038.
Does this calculator add deposits at the start or the end of each month?
At the start. Each month the contribution is added first and then that month's interest is credited, so every deposit earns a full month of growth. Calculators that deposit at month-end show slightly less: $500 a month at 7% for 10 years is $86,542.40 with end-of-month deposits versus $87,047.23 here.
How does compounding frequency change the result?
More frequent compounding earns a little more at the same annual rate. In this calculator, $10,000 left for 10 years at 8% becomes $21,589.25 compounded annually, $22,080.40 quarterly, $22,196.40 monthly and $22,253.46 daily. The step from annual to monthly matters far more than the step from monthly to daily.
Does this calculator include inflation and taxes?
No. It shows nominal, before-tax growth. To see purchasing power, enter a real return instead, calculated as (1 + return) / (1 + inflation) - 1, so an example 10% return with 3% inflation is about 6.8%. Tax depends on your country and account type, so deduct it separately.
What is the difference between APR and APY?
APR is the quoted yearly rate before compounding; APY is what you actually earn in a year once compounding is included. An 8% APR compounded monthly is an APY of 8.30%. Enter the APR (the nominal rate) in this calculator and choose the compounding frequency separately.
How much will a Rs 10,000 monthly SIP grow to in 15 years?
You invest Rs 18,00,000 over 15 years. At an example 12% annual return compounded monthly it grows to Rs 50,45,760 (about 50.5 lakh), and at an example 8% to Rs 34,83,451. Mutual fund returns are not fixed, so actual values will differ.