How often does compounding occur here?
This calculator compounds monthly, which aligns with the monthly contribution field.
Finance
Compound Interest Calculator
Enter an initial deposit, expected return rate, time horizon, and optional monthly contributions to forecast your investment growth.
Live calculator output
Set principal, rate, time horizon, and monthly additions to preview growth.
How it works
Compound interest means you earn returns on your returns. Each month, the calculator takes your current balance, applies the monthly return (annual rate ÷ 12), then adds your monthly contribution.
The formula for the initial deposit is FV = P × (1 + r/12)^(12×t). Contributions use the future value of an annuity formula. Combined, these give the total projected balance — and the compounding effect accelerates dramatically over many years.
Practical example
Start with 10,000, contribute 250/month at 7% annual return for 10 years.
The initial 10,000 grows to about 20,097. Your 30,000 in contributions grows to about 43,325. Total balance: roughly 63,422 — meaning you earned about 23,422 in compound interest on top of what you put in.
Frequently asked questions
What happens if monthly contribution is 0?
Growth is calculated from the initial deposit only.
Is return rate guaranteed?
No. The return rate is an assumption for projection and not a guarantee.
What is the Rule of 72?
Divide 72 by the annual return rate to estimate how many years it takes to double your money. At 7%, that is about 10.3 years.
Does this account for inflation?
No. To see real returns, subtract the expected inflation rate from your return rate. For example, use 4% instead of 7% if you expect 3% inflation.
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