About the Compound Interest Calculator
Compound interest is interest earned on both your original money and the interest it has already earned. Over long periods, this compounding effect can dramatically outpace simple interest. This calculator shows how an initial amount plus regular contributions can grow, and how much of the final balance comes from your contributions versus earned interest.
How it’s calculated
Future value combines the initial principal and a series of contributions: FV = P(1+i)^N + C · [ ((1+i)^N − 1) / i ], where i is the periodic rate (annual rate ÷ compounding periods per year), N is the total number of periods, P is the initial principal, and C is the contribution per period.
Example calculation
Investing $10,000 up front plus $300 per month for 20 years at a 7% annual return, compounded monthly, grows to about $196,700. You would have contributed $82,000, meaning roughly $114,700 came from compound growth.
Frequently asked questions
What does compounding frequency mean?
Compounding frequency is how often earned interest is added back to the balance — daily, monthly, quarterly, or annually. More frequent compounding produces slightly higher returns because interest starts earning interest sooner.
Is a 7% return realistic?
Historically, a diversified stock market portfolio has returned roughly 7% per year after inflation over long periods, though returns vary widely year to year and past performance doesn't guarantee future results. Use a rate that reflects your own investments.
Why do small differences in rate matter so much?
Because compounding is exponential, even a one-percentage-point difference in return can change the final balance dramatically over decades. Time in the market is one of the most powerful variables.
This calculator provides estimates for educational purposes and should not be considered financial, tax, or legal advice. Your actual figures may vary with lender terms, fees, and market conditions.