Compound Interest Calculator
See how your money grows over time with the power of compounding and regular contributions.
Calculate Your Investment Growth
Year-by-Year Growth
Detailed breakdown of your investment balance at the end of each year.
| Year | Contributions | Interest Earned | Balance |
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What Is Compound Interest?
Compound interest is the process of earning interest on both your original principal and on previously accumulated interest. Unlike simple interest, which is calculated only on the initial amount, compound interest accelerates the growth of your savings over time.
When interest is compounded monthly, each month's interest is added to your balance, and the next month's interest is calculated on the new, larger balance. This creates an exponential growth curve that becomes more dramatic over longer time periods.
The key factors that influence compound interest are:
- Principal — the initial amount you invest.
- Interest rate — the annual rate of return.
- Compounding frequency — how often interest is calculated (this calculator uses monthly compounding).
- Time — the longer your money compounds, the faster it grows.
- Regular contributions — adding money each month significantly boosts the final balance.
How to Calculate Compound Interest
The future value of an investment with regular monthly contributions and monthly compounding is calculated by combining two standard formulas:
The first part calculates how the initial lump sum grows. The second part is the future value of an ordinary annuity — it accounts for each monthly contribution entering the account at a different time, so earlier contributions compound for more periods than later ones.
Example of Compound Interest Growth
Suppose you invest $10,000 with a 7% annual return compounded monthly and add $200 every month. Here is how your investment would grow at key milestones:
| Year | Contributions | Interest Earned | Balance |
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Frequently Asked Questions
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously earned interest. Over time, compound interest generates significantly higher returns because each interest payment itself earns interest in subsequent periods.
How often should interest be compounded?
The more frequently interest is compounded, the more you earn. Common compounding frequencies include annually, quarterly, monthly, and daily. This calculator assumes monthly compounding, which is the most common frequency for savings accounts and many investment products.
How do monthly contributions affect compound interest?
Regular monthly contributions dramatically increase your final balance. Each contribution begins earning compound interest from the moment it is added, so earlier contributions have more time to grow. Even small consistent deposits can lead to substantial wealth over long investment horizons.
Popular Compound Interest Guides
Example Scenarios
See how the numbers play out for common starting amounts and time horizons. Each scenario uses the same monthly compounding formula as the calculator above.
Lump Sum Investments
- $1,000 invested for 10 years — see how even a small deposit doubles in a decade
- $5,000 invested for 20 years — a common starter fund growing past $20,000
- $10,000 invested for 10 years — the classic doubling-money scenario
- $10,000 invested for 20 years — extends to a 4x return over two decades
- $20,000 invested for 20 years — turning a savings milestone into $80,000
- $50,000 invested for 20 years — crossing the $200,000 mark through compounding alone
- $50,000 invested for 30 years — the 30-year view of a significant lump sum
- $100,000 invested for 20 years — from six figures to over $400,000
- $100,000 invested for 30 years — the third decade delivers the most growth
- $200,000 invested for 30 years — crossing $1.6 million through compounding
- $500,000 invested for 30 years — how compounding creates $4 million
- $100K investment growth overview — compare 10, 20, and 30-year outcomes
Monthly Contribution Scenarios
- $1,000/month for 20 years — how regular contributions reach $520,000
- $1,000/month compound interest calculator — adjustable rate and period
- Investing $200/month for 10 years — building your first investment foundation
- Investing $200/month for 20 years — the same amount, doubled time horizon
- Investing $300/month for 20 years — bridging the gap to a $200/month habit
- Investing $500/month for 30 years — path to over $600,000
- Investing $750/month for 20 years — mid-range contribution, long-term impact
- Investing $1,000/month for 20 years — a serious wealth-building pace
- Investing $1,000/month for 30 years — 30-year outcome of consistent $1,000 contributions
Ready to Start Investing?
The best time to start investing is as early as possible. Even small, consistent contributions can grow significantly over time thanks to compound returns. Consider exploring low-cost index funds as a straightforward starting point for building long-term wealth.
What to Look For in a Brokerage Account
The account you invest through has a lasting impact on your long-term returns — primarily through fees, fund availability, and tax treatment. Key factors to evaluate:
- Expense ratios — index funds with 0.03%–0.10% annual expense ratios keep significantly more of your return compared to actively managed funds at 0.5%–1.5%
- Account types offered — taxable brokerage, traditional IRA, Roth IRA, and SEP-IRA each have different tax treatment and annual contribution limits
- Investment minimums — many brokerages now offer fractional shares with no account minimum; others require $1,000 or more to start
- Automatic investment tools — scheduled recurring contributions and automatic dividend reinvestment remove friction and support consistent long-term saving
- Platform design — a simple, low-distraction interface reduces the temptation to trade rather than hold, which is the most common long-term investing mistake