Compound Interest Calculator
Project investment growth with contributions and compounding.
How to use
- Enter the initial principal and the monthly contribution (at least one must be greater than 0). Contributions are treated as deposits at the end of each month.
- Fill in the annual rate (%), the term in years (decimals allowed) and pick the compounding frequency: yearly, monthly or daily.
- Results update as you type: final balance, total invested, interest earned and the growth multiple.
- The "year-by-year milestones" table below lists the balance at each full year (up to 10 rows) so you can watch compounding accelerate.
- The currency is whatever you use (yuan, dollars, etc.): the tool only applies the math and ignores inflation, fees and taxes.
FAQ
Which formulas are used?
Does the compounding frequency matter much?
Can the annual rate be 0?
Do the results include inflation and taxes?
How to use
- Set principal and deposits
Enter the initial principal and the monthly contribution; at least one must be above 0. Deposits arrive at each month's end and earn no interest that month.
- Choose rate and term
Fill in the annual rate as a percentage (0-100) and the term in years, decimals allowed between 0.1 and 100. Results refresh as you type.
- Pick the compounding
Select Annually, Monthly or Daily in the Compounding dropdown. Higher frequency reinvests interest sooner, nudging the final balance slightly upward.
- Read the four metrics
Results show the final balance, total invested, total interest earned and the growth multiple (balance ÷ invested). The last figure shows what compounding added.
- Scan yearly milestones
The year-by-year table lists the balance at each full year, up to 10 rows. The accelerating back half of the compounding curve is easy to see there.
About this tool
The calculator splits your money into two streams. The lump sum grows as FV = PV × (1 + r/n)^(n×t). Monthly contributions use an equivalent monthly rate i = (1 + r/n)^(n/12) - 1. They accumulate with the annuity formula m × [((1+i)^N - 1) ÷ i]. Their sum is the final balance. Subtracting total invested gives the interest earned, and balance ÷ invested gives the growth multiple.
It suits regular-investment plans, education funds and retirement saving estimates. With 10,000 up front, 1,000 added monthly, 5% a year and monthly compounding for 10 years, the balance lands near 164,000 against 130,000 invested. Compounding frequency matters little at these scales: over a decade, annual and daily differ by roughly 1% of the balance. Pick the option that matches your actual product.
How it works
Compound interest keeps a mental-math companion, the rule of 72. Divide 72 by the annual rate to approximate the doubling time: about 14.4 years at 5%, 10.3 at 7%. Errors usually stay under ten percent. The constant behind it is e. Studying interest reinvested infinitely often at 100% per period, Jacob Bernoulli found in 1683 that the value converges on 2.718…. Continuous compounding, e^rt, is that limit taken to the end. The annually, monthly and daily options in this tool are three sample points along the same convergence path. Higher frequency closes part of the distance to the ideal. For ordinary savings the gap is negligible.
Comparing products starts with the effective annual rate: EAR = (1 + r/n)^n - 1. A nominal 5% compounds to about 5.116% monthly and 5.127% daily. The differences live in the second decimal place, which matches the roughly 1% balance effect the results show. The real levers are term and contribution. An extra 500 a month typically dwarfs the move from annual to daily compounding. That detail is the one most people overrate. Tune the term and the monthly amount first. Only then bother with the frequency dropdown.
When to use it
- Comparing two wealth products
Enter each prospectus rate with its compounding frequency, say 5.3% annual against 5.15% monthly. The final balance and growth multiple reveal the winner, instead of letting the bigger headline number decide.
- Backfilling an education fund
Set the target year to the one your child turns 18 and trial monthly amounts. Starting a year late usually costs more than hundreds of smaller deposits add, and the steep back half of the yearly table shows why.
- Explaining compounding to family
The yearly table is the teaching aid. Point at year one and year ten to show how money starts earning on itself. Relatives and children read the curve long before they accept the formula behind it.
Tips & tricks
- Outputs are nominal: mentally subtract inflation, fees and taxes, or rerun with a lower rate as a buffer.
- Set the rate to 0 for a pure savings check. The balance equals total invested and the multiple is 1x.
- To price procrastination, shorten the term by the years you would delay and compare the interest gap.
Things to watch
- Match the frequency to the product
Current accounts compound daily, wealth products monthly or quarterly, fixed term deposits once at maturity. Filling an annual product in as daily compounding manufactures interest that will never arrive. Check the terms before choosing an option.
- Deposits earn nothing that month
Monthly contributions are treated as arriving at month end and earn no interest that month. That matches a payday-then-buy rhythm. A mid-year bonus smeared across months understates reality. Model it as its own lump sum instead.
- The table lists full years only
Terms from 0.1 to 100 years accept mid-year endpoints. Yet the milestone table stops at the last completed year. For a value as of graduation or a sale date, read the final balance, not the last table row.