How to use
- Enter your starting amount and, if you like, a monthly contribution.
- Enter the yearly interest rate and choose how often it compounds.
- Set the time in years or months.
- See the future value, the interest earned and a year-by-year table.
Compound interest formula
A = P × (1 + r/n)^(n × t)
- P is the starting amount and t the time in years.
- r is the yearly rate as a decimal (5% = 0.05).
- n is how many times a year interest is added: 1, 2, 4, 12 or 365.
Monthly contributions are added at the end of each month. With monthly compounding they grow to C × ((1 + r/12)^k − 1) ÷ (r/12) after k months.
Example
$10,000 plus $100 a month at 5%, compounded monthly, for 10 years:
- You put in $22,000.00
- Interest earned: $9,998.32
- Final balance: $31,998.32
Does compounding frequency matter?
$10,000 at 5% for 10 years, with no contributions:
| Compounding | Balance | Effective yearly rate |
|---|---|---|
| Yearly | $16,288.95 | 5% |
| Twice a year | $16,386.16 | 5.063% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
Time matters far more than frequency. $200 a month at 7% compounded monthly grows to $34,616.96 in 10 years but $243,994.20 in 30 years.
How contributions work with other compounding
When interest compounds yearly or quarterly, each monthly deposit grows at the monthly rate that matches it: (1 + r/n)^(n/12) − 1. Banks sometimes pay simple interest for part periods instead, so their figures can differ slightly.
The effective yearly rate, (1 + r/n)^n − 1, is the same idea as the APY that banks quote on savings.
Interest paid only on the original amount? Use the simple interest calculator. Investing monthly in mutual funds? Try the SIP calculator.