How to use
Enter the starting amount, your monthly contribution, the annual interest rate, the number of years and how often interest is compounded. You’ll see the final balance, how much you put in yourself and how much interest you earned, plus a year-by-year table.
If you plan to raise your contributions as your income grows, enter the yearly increase: from the second year each monthly contribution goes up by that percentage, and again every year after. The chart shows how much of the final balance is your money and how much is interest.
How compound interest works
With compounding, earned interest is added to the balance, so the next interest is calculated on a bigger amount. Without contributions the formula is:
A = P × (1 + r / n)^(n × t), where P is the starting amount, r is the annual rate, n is the number of compounding periods per year and t is the number of years.
The calculator accrues interest monthly and adds it to the balance at the end of each compounding period; contributions are added at the end of each month.
Examples
- $10,000 plus $200 a month at 5% for 10 years, compounded monthly: $47,526.55, of which $34,000 are your contributions and $13,526.55 is interest.
- $10,000 at 5% for 10 years with no contributions: $16,470.09 compounded monthly, $16,436.19 quarterly, $16,288.95 annually.
FAQ
Is monthly compounding better than annual? At the same rate, yes — interest starts earning interest sooner. Banks often quote different rates for different options, so compare the final amounts.
Should I enter the APY or the interest rate? Enter the nominal annual interest rate. APY already includes the effect of compounding, so using it here would overstate the result.
Are taxes included? No. Interest is usually taxable income; account for it separately.
Can I use it for investments? Only as an estimate with a constant return. Real investment returns vary and aren’t guaranteed.