Compound Interest Calculator
The Compound Interest Calculator shows the future value of a lump sum plus regular monthly contributions, with interest compounded at your chosen frequency. It visualizes how growth accelerates year after year.
What this means
Compound interest means your interest earns interest. With each compounding period, interest is added to the balance, so the next period's interest is calculated on a larger amount. Over long horizons this creates exponential growth — the reason starting early matters so much.
How we calculate it
Formula
FV = P × (1 + r)^n + C × [ ((1 + r)^n − 1) / r ] — where P is the starting balance, r is the monthly rate, n is the number of months and C is the monthly contribution.Worked example
$10,000 invested at 8% compounded annually for 10 years:
- 1Future value = 10,000 × (1.08)^10
- 2Future value = 10,000 × 2.158925
- 3Future value ≈ $21,589.25
- 4Interest earned ≈ $11,589.25
Important assumptions
- Monthly contributions are made at the beginning of each month.
- The annual return is compounded at the selected frequency and held constant.
- Results do not account for taxes, fees or inflation.
Frequently asked questions
Why does compounding frequency matter?
More frequent compounding means interest is credited to your balance sooner, so it earns its own interest sooner. Daily compounding produces a slightly higher future value than annual compounding at the same nominal rate.
What return rate should I use?
It depends on your asset allocation. Historically, broad U.S. stock market averages have returned roughly 7–10% per year before inflation, while bonds and cash earn less. Past performance does not guarantee future results.
Is compound interest good or bad?
It works in your favor when you are earning it on investments, and against you when you carry credit-card balances — because the interest is compounded on what you owe. Use a credit card payoff calculator to see the flip side.