See how an initial principal grows with compound interest at any compounding frequency, with optional recurring monthly contributions.
Final balance
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Total contributed
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Interest earned
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How It Works
Compound interest means each period's interest is added to the balance, so the next period earns interest on a larger amount. The formula is A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the number of compounding periods per year, and t is the number of years.
When you add a monthly contribution C, each contribution compounds from the month it is made. The calculator treats contributions as made at the end of each month and adds their future value to the compounded principal.
Total interest earned is the final balance minus your principal and minus the total of all contributions, so you can see how much of the growth came from compounding rather than from money you added.
Worked example: $10,000 invested at 7% compounded monthly for 20 years grows to 10000 × (1 + 0.07/12)^(12×20) ≈ $40,462. Adding $200/month at the same rate brings the final balance to about $132,708, of which $74,708 is interest earned on top of the $58,000 you contributed.
Frequently Asked Questions
What compounding frequency should I use?
Match the frequency of the account. Savings accounts typically compound daily or monthly, certificates of deposit often compound daily, and investments often compound annually.
Are contributions made at the start or end of each month?
This calculator treats contributions as end-of-month (ordinary annuity), which is the common convention for recurring deposits.
Does this account for inflation or taxes?
No. The result is the nominal future value. Real purchasing power will be lower after inflation, and investment gains may be taxed depending on the account type.
What is the difference between compound and simple interest?
Simple interest is earned only on the original principal, while compound interest is earned on the principal plus accumulated interest. Over long periods compounding produces dramatically more growth.
How does the monthly contribution affect the result?
Because contributions compound over time, even modest monthly additions can outpace the initial principal. In the worked example, $200/mo for 20 years adds $48,000 of contributions but generates roughly $74,708 of total interest when combined with the principal.
What is the Rule of 72?
A quick way to estimate doubling time: divide 72 by the annual interest rate. At 7%, money roughly doubles in 72 / 7 ≈ 10.3 years. It is an approximation, not exact, but useful for mental math.