Finance

Compound Interest Calculator

Project future value with a starting balance, recurring monthly contributions, and a consistent annual interest rate.

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Enter your starting amount, monthly contribution, interest rate, and time horizon.

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Compound Interest Formula Explained

Compound interest grows money because each period earns interest on the previous balance, not just the original deposit. This calculator uses monthly compounding and monthly contributions.

Future Value = Principal x (1 + r / 12)^(12t) + Monthly Contribution x (((1 + r / 12)^(12t) - 1) / (r / 12))

Where r is the annual interest rate as a decimal and t is the number of years.

What is compound interest?

Compound interest is the engine behind long-term savings growth. Instead of earning interest only on your initial deposit, you also earn interest on interest that has already been added to the balance.

Over time, this snowball effect becomes more visible. The longer the time horizon and the more consistently you contribute, the larger the gap between simple saving and compounded growth.

Frequently asked questions

What is compound interest?
Compound interest is interest earned on both the original principal and the accumulated interest already added to the balance, allowing growth to accelerate over time.
Why do regular contributions matter so much?
Recurring deposits increase the amount that can compound. Over longer periods, that contribution habit often matters as much as the rate itself.
Does this calculator assume monthly compounding?
Yes. This version assumes monthly compounding and monthly contributions, which fits the way many savings and investment plans are funded.
How often should interest compound for the best results?
More frequent compounding produces higher returns. Daily compounding yields slightly more than monthly, which yields more than annual. In practice the difference between daily and monthly compounding is small, but it compounds significantly over decades.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money with compound growth. At 6% annual return, your money doubles in approximately 72 / 6 = 12 years.

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