Compound Interest Calculator
This free compound interest calculator shows how an initial amount grows over time with monthly compounding, plus optional regular monthly contributions. Enter your numbers to see the final balance, total contributions, total interest earned, and a year-by-year balance table, all updating instantly.
How to Use It
- Enter your initial principal, annual interest rate, and number of years.
- Optionally enter a monthly contribution amount.
- Your final balance, total contributions, and total interest earned update instantly, along with a year-by-year balance table.
How It Works
This calculator simulates growth one month at a time: each month, the current balance earns interest at one-twelfth of the annual rate, and then that month's contribution (if any) is added. Repeating this for every month of the chosen term, rather than using a single formula, is what makes the year-by-year table possible and keeps the exact math easy to verify by hand for any individual month.
Formula
balance (each month) = previous balance × (1 + annual rate ÷ 12 ÷ 100) + monthly contribution
A worked example: a $10,000 initial deposit at a 7% annual rate, compounded monthly for 20 years, with a $200 monthly contribution, grows to a final balance of $144,572.72. Total contributions over that period are $58,000 ($10,000 initial plus $200 × 240 months), meaning $86,572.72 of the final balance came purely from interest, more than the total amount actually contributed.
The year-by-year table shows this acceleration directly: the balance grows more in the last few years than it did in the first few, even though the monthly contribution never changes, because a larger and larger base is earning interest each year.
Everything runs client-side in your browser. No numbers you enter are sent anywhere or stored.
Frequently Asked Questions
How is compound interest different from simple interest?
Simple interest is calculated only on the original principal, so it earns the same dollar amount every period. Compound interest is calculated on the principal plus all interest already earned, so each period's interest is larger than the last as the balance grows. Over long timeframes, this difference becomes substantial. It's the entire reason compound interest has a reputation as a wealth-building tool.
Why does this calculator use monthly compounding instead of letting me choose a frequency?
Monthly compounding matches how most real savings and investment accounts actually compound, and it keeps the math unambiguous once a monthly contribution is also in the picture. A separate compounding-frequency selector interacting with a monthly contribution schedule multiplies the edge cases (does a contribution added between compounding dates itself earn partial interest that period?) for limited practical benefit, since most real accounts you'd use this calculator to estimate already compound monthly or daily.
Why does contributing the same amount earlier make such a big difference?
Because every dollar contributed earlier has more total months to compound before your target date. A dollar contributed in year 1 earns interest for the entire remaining term; the same dollar contributed in year 19 (of a 20-year plan) only has one year left to grow. This is why financial advice consistently emphasizes starting to save early. It's not about contributing more. It's about giving each contribution more time.
Does the yearly balance table account for taxes on the interest earned?
No, this calculator shows gross growth only, with no assumptions about account type (taxable brokerage, tax-deferred retirement account, tax-free account) or your personal tax situation, since those vary enormously and this tool has no way to know which applies to you. Treat the results as pre-tax growth estimates.
What if I want to model a one-time lump sum with no ongoing contributions?
Leave the monthly contribution field at 0 (or blank). The calculator still compounds your initial principal monthly over the chosen number of years. The monthly contribution is purely additive and optional, not required to get a result.
Is a higher interest rate always better for this calculation?
Mathematically, a higher rate always produces a larger final balance, all else equal. This calculator doesn't evaluate real-world risk, though: investments offering a higher expected rate typically carry more risk of loss than something like a savings account or CD, so the rate you enter should reflect a realistic, honest expectation for whatever account or investment you're actually modeling, not simply the highest number you'd like to see.
Why is my final balance more than double what I contributed?
That's compounding doing what it does over a long enough timeframe. Interest earned in earlier years itself starts earning interest in later years, and that effect accelerates the longer the money stays invested. It's a real, correctly-calculated result, not a rounding artifact. See the worked example below, where interest earned actually exceeds total contributions.