A compound interest calculator shows how an investment grows when the interest it earns starts earning interest of its own. Enter your starting amount, the annual interest rate, and the time horizon, and it projects the future balance — with a year-by-year breakdown of principal versus earned interest.
This free online tool is for savers and investors who want to see the long game in numbers: people comparing savings accounts, testing what a retirement contribution becomes over decades, or answering the classic question of how much an early start is worth. It takes your initial deposit, the annual rate, how often interest compounds, and the number of years, with an optional regular contribution each month. The output shows the final balance, the total you contributed, and the interest earned — the three numbers that make compounding concrete. Drag the rate slider and the growth curve redraws instantly, so you can feel why a few extra percentage points matter so much over time. Everything runs in your browser with no sign-up and no data stored.
Worked example
Inputs: initial deposit $10,000, annual rate 7%, compounded monthly, 30 years, no extra contributions.
- Monthly rate: r/n = 0.07 ÷ 12 = 0.0058333
- Periods: n × t = 12 × 30 = 360
- Growth factor: (1.0058333)^360 ≈ 8.116497
A = 10,000 × 8.116497 = $81,164.97
Interest earned: 81,164.97 − 10,000 = $71,164.97 — more than seven times the original deposit, generated by compounding alone.
Frequency matters but time matters more: compounded annually instead of monthly, the same inputs give $10,000 × 1.07^30 = $76,122.55, about $5,042 less. And starting ten years earlier (40 years total) pushes the monthly-compounded result past $160,000 — the extra decade is worth more than the entire first 30 years’ growth.
How to use it
- Enter the Initial deposit — the lump sum you start with.
- Enter the Annual rate — the expected yearly return as a percent.
- Select the Compounding frequency — monthly, quarterly, semi-annually, or annually.
- Enter the Years — how long the money stays invested.
- Optionally enter a Monthly contribution, then read your result: the projected balance, total contributions, and total interest earned.
The formula behind it
Frequently asked questions
What is compound interest in simple terms?
It is interest earned on interest. Simple interest pays you only on your original deposit; compound interest adds each period's earnings to the balance, so the next period's interest is calculated on a bigger number. Over long horizons this creates exponential growth — the balance curve starts flat and bends upward.
Does monthly compounding really beat annual compounding?
Yes, but modestly. More frequent compounding means interest starts earning interest sooner. On $10,000 at 7% for 30 years, monthly compounding gives $81,164.97 versus $76,122.55 annually — a $5,042 difference, roughly 6%. The effect is real but small next to the choice of rate and time horizon.
What annual return should I assume for long-term investing?
History is a guide, not a promise. Broad US stock market index funds have averaged roughly 10% nominal (about 7% after inflation) over very long periods, while savings accounts and bonds have averaged far less. Use the calculator with several rates — a conservative one, a middle one, and an optimistic one — to see the range of plausible outcomes.
Can I include monthly contributions in the calculation?
Yes — enter a Monthly contribution and the calculator adds the future value of that payment stream to the lump-sum growth. Regular contributions dominate the result for most savers: $200 a month at 7% for 30 years grows to about $244,000 on its own, far more than most starting deposits.
Why does starting early matter so much?
Because compounding is exponential, the earliest years do the heaviest lifting — money invested in year one compounds for the full horizon, while money added in year twenty compounds for only a fraction of it. That is why a dollar invested at 25 is worth several times a dollar invested at 45 at the same rate of return.