Compound interest calculator with monthly contributions and year-by-year breakdown.
Free compound interest calculator. Enter your starting amount, annual rate, time horizon, and how often the interest compounds. Optional monthly contribution. Updates instantly. Shows the math, not just the answer.
| Year | Contributions | Interest | Balance |
|---|
What is compound interest?
Compound interest is interest paid on interest. With simple interest you earn a fixed return on your starting amount. With compound interest, every payout joins the principal — so the next payout is calculated on a slightly bigger base. The longer the runway, the more dramatic the effect.
A = final amount . P = principal . r = annual rate (decimal) . n = compoundings per year . t = years . PMT = monthly contribution
The first term is the growth of your starting amount. The second term handles a recurring monthly contribution — that’s why a $200/month habit on top of a $10,000 lump sum at 7.5% over 30 years ends well past $300,000 even though you only deposited $82,000 across the whole period.
Three real-world compound interest scenarios
Principal · $10,000 lump sum
Rate · 7% annual rate
Time · 20 years
Frequency · monthly compounding
Final amount
$40,387
Money roughly quadruples in 20 years at 7%. The ‘rule of 72’ approximation: 72/7 ≈ 10.3 years to double. Two doublings ≈ 20 years.
Principal · $5,000 starting + $300/month
Rate · 8% annual rate
Time · 25 years
Frequency · monthly compounding
Final amount
$321,776
Total contributed: $95,000 ($5K + $90K monthly). Interest earned: $226,776. The contributions account for ~30% of the final balance; compounding does the rest.
Principal · $1,000 lump sum
Rate · 6% annual rate
Time · 40 years
Frequency · monthly compounding
Final amount
$10,957
Eleven-fold growth from a single deposit. This is why the financial cliché ‘time in the market beats timing the market’ actually holds.
Annual vs monthly vs daily compounding
Same $10,000 starting amount, same 7.5% annual rate, same 20 years. Only the compounding frequency changes.
Four things the compound interest calculator can’t tell you
Time beats rate
A 25-year-old saving $200/month at 7% retires with more than a 35-year-old saving $400/month at the same rate. Starting early is the single highest-leverage decision.
Reinvest, don’t withdraw
Compound interest only works if every payout joins the principal. Bond coupons that go to a checking account, dividends paid as cash — both kill the curve.
Inflation is the silent tax
A 7% nominal return at 3% inflation is a 4% real return. The compound interest calculator above shows nominal numbers; subtract inflation to see what your money actually buys.
Past returns are not future returns
Historical equity averages around 7-10% real returns. Use lower numbers for planning. A calculator that shows you 12% over 40 years is mostly fiction.
Common questions about the compound interest calculator
How does the compound interest calculator work?
Drag the rate and time sliders, type your starting amount and monthly contribution, and pick how often interest compounds. The result, contribution split, and year-by-year breakdown all update instantly. Calculation runs entirely in your browser — nothing is sent to a server.
What is the formula behind compound interest?
The standard formula is A = P(1 + r/n)nt. With monthly contributions you add a second term: PMT × [((1 + r/n)nt − 1) / (r/n)] × (1 + r/n). Where A is the final amount, P is the principal, r is the annual rate as a decimal, n is the compoundings per year, t is years, and PMT is the recurring monthly contribution.
Is compound interest the same as APY?
APY (annual percentage yield) is the effective rate after compounding is applied. A 7.5% nominal rate compounded monthly produces a 7.76% APY — the calculator above shows both. APR is the nominal rate before compounding; APY is what your money actually earns over a year.
How is this different from a simple interest calculator?
Simple interest pays you a fixed return on the original principal only. A $10,000 deposit at 7% simple interest earns $700 every year, regardless of how long you leave it in. Compound interest pays you on the principal plus all previously earned interest, so the same deposit grows much faster over time.
Should I pick monthly or daily compounding?
Either is fine. Going from monthly to daily on a $10,000 deposit at 7.5% over 20 years adds about $193 to the final balance. The bank’s headline rate matters far more than the compounding frequency. Pick the account with the highest APY, not the highest n.
Can I use this calculator for SIP or recurring deposit returns?
Yes. Set the starting amount to your initial lump sum (or 0 if you’re starting fresh), put your SIP installment in the monthly contribution field, choose monthly compounding, and the result is your projected SIP value. For Indian SIPs that compound quarterly, set frequency to quarterly.
Does this account for taxes and inflation?
No. The result is nominal, pre-tax. Subtract your country’s capital gains or interest income tax rate from the final amount, then divide by (1 + inflation)^t to get real, after-tax purchasing power. A 7% nominal return at 3% inflation and 20% tax is closer to 2.6% real after-tax.
Why no signup or account?
Because nothing about this calculator needs your email. The math runs in your browser, the inputs save to localStorage, no data leaves your device. The site is paid for by my consulting work and a few honest affiliate links elsewhere — none of that touches the calculator itself.
Get notified when new calculators ship.
One Friday email a week. Free, easy unsubscribe, no spam.