Compound Interest Calculator
Calculate how savings or investments can grow with different rates, compounding frequencies, and periodic contributions.
Estimated result
Enter your values and calculate to see the projection.
Mathematical estimate only. It does not account for taxes, fees, inflation, or future changes in the rate.
How compound interest works
Compound interest adds earned interest to the balance, allowing that interest to generate further growth in later periods. Simple interest, by contrast, continues to calculate interest from the original principal alone.
Growth depends on starting principal, rate, time, and compounding frequency. Regular contributions can materially change the result because each deposit begins its own period of compounding.
Compound interest formula
Without contributions, the standard formula uses principal P, annual rate r, compounding periods per year n, and time in years t.
A = P × (1 + r ÷ n)^(n × t)
The calculator uses this form for an entered annual rate. An effective monthly rate is mapped by compound equivalence instead of simply multiplying it by 12.
Monthly and annual contributions
Contributions are added at the end of each selected month or year. Each deposit grows for the exact time remaining, even when its schedule differs from the selected compounding frequency.
Total contributed includes the initial principal and every completed contribution. Interest earned is the difference between that amount and the estimated final balance.
How compounding frequency affects growth
Annual compounding credits interest once per year, quarterly compounding four times, monthly compounding twelve times, and the daily convention in this calculator uses 365 periods.
For the same nominal annual rate, more frequent compounding generally produces a higher balance because interest is credited sooner. The size of the difference depends on rate and time.
Annual rates, monthly rates, APR, and APY
An entered annual rate is treated as a nominal annual rate allocated across the selected compounding periods. An entered monthly rate is treated as effective for one month, with annual equivalence calculated as (1 + monthly rate)^12 − 1.
APR and APY are not interchangeable. APR commonly describes a nominal annual rate under a stated convention, while APY reflects compounding over a year. Always confirm the definition supplied by the financial product you are modeling.
Compound growth example
A starting balance of 1,000 at a 10% annual rate, compounded annually for 10 years, grows to approximately 2,593.74 without contributions. Adding monthly deposits increases both contributed capital and the amount that can compound over time.
This calculator provides a mathematical estimate, not a return forecast. Taxes, fees, inflation, and future rate changes are not included.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated from original principal. Compound interest adds earned interest to the balance, so it can earn interest in later periods.
How do monthly contributions affect compound growth?
Each contribution increases invested capital and begins compounding from the end of its contribution month through the remaining term.
What does monthly compounding mean?
It means a nominal annual rate is divided into twelve periods and interest is credited to the balance twelve times per year.
Can I start with no initial deposit?
Yes. An initial principal of zero is valid when the periodic contribution is greater than zero.
Is a monthly rate times twelve the equivalent annual rate?
Not for an effective monthly rate. Its compound annual equivalent is (1 + monthly rate)^12 − 1, which includes interest earned on interest.
Are contributions made at the beginning or end of each period?
This calculator assumes end-of-month or end-of-year contributions. Beginning-of-period deposits would compound for one additional period and produce a higher result.
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