Compound Interest Calculator

Compound interest is often called the eighth wonder of the world — it’s the engine that turns steady saving into real wealth, because you earn returns not just on your money but on the returns it already made. This compound interest calculator shows how a starting amount plus regular monthly contributions can grow over the years, and how much of the final balance is interest rather than your own deposits.

What compound interest actually is

With simple interest, you earn a return only on your original deposit. With compound interest, each period’s interest is added to your balance, so the next period you earn interest on a larger amount — interest on interest. Over a few years the difference is modest; over decades it becomes enormous. That’s why starting early matters so much: time is the most powerful ingredient in compounding.

The formula

For a lump sum, the future value is A = P × (1 + i)^N, where P is the principal, i is the periodic rate, and N is the number of periods. When you also add regular contributions, the future value of those deposits is PMT × ((1 + i)^N − 1) ÷ i. This calculator combines both, compounding monthly.

A worked example

Start with $5,000, add $200 a month, and earn 7% a year for 20 years. You’d finish with about $123,000 — yet you only deposited $53,000 of your own money ($5,000 plus $200 × 240 months). The other ~$70,000 is interest. Stretch the same plan to 30 years and the balance climbs past $265,000, with interest now dwarfing your contributions. That accelerating curve is compounding at work.

Using this for real goals

Try adjusting the rate to see how returns change the outcome, and the years to see the power of time. For retirement planning specifically, use our retirement calculator; to work out the monthly amount needed for a specific target, use the savings goal calculator. Remember that real-world returns aren’t smooth — markets rise and fall — so treat the result as a long-run estimate, not a guarantee.

Frequently asked questions

How does compound interest work?

Each period's interest is added to your balance, so future interest is earned on a growing amount — interest on interest. Over long periods this compounding effect grows your money far faster than simple interest. The calculator compounds monthly and can include regular monthly contributions.

What's the formula for compound interest?

For a lump sum it's A = P×(1+i)^N, where P is the principal, i the periodic rate, and N the number of periods. With regular deposits, the contributions add PMT×((1+i)^N−1)/i. This calculator combines both using monthly compounding.

Why does starting early matter so much?

Because compounding rewards time. The longer your money compounds, the more the 'interest on interest' effect accelerates. As the example shows, the same monthly savings over 30 years can more than double the result of 20 years — so years in the market are your most valuable asset.

Are these returns guaranteed?

No. Investment returns vary year to year and can be negative in some years; this calculator assumes a steady average rate for illustration. Use it as a long-run estimate to compare scenarios, not a promise. This is educational only and not financial advice.