How the compound interest calculator works
With no extra deposits, a balance grows by the compound interest formula:
- P: initial deposit
- r: annual rate as a decimal
- n: compounding periods per year
- t: years
Monthly contributions are added as an annuity. We convert the rate to its equivalent monthly rate, i = (1 + r/n)n/12 − 1, so every compounding choice is handled exactly, then add each month's deposit:
m is the number of months. If you raise contributions each year, the calculator simulates month by month instead. The effective annual rate (APY) is (1 + r/n)n − 1. "Today's dollars" divides the final balance by (1 + inflation)t. Taxes and fees are not included.
Worked example
You invest $10,000 and add $200 at the end of every month for 10 years at 7% compounded monthly. The monthly rate is 0.07 ÷ 12 = 0.0058333 and there are 120 months:
200 × (1.0058333120 − 1) ÷ 0.0058333 = $34,616.96
Total ≈ $54,713.58
You put in $34,000 ($10,000 + 120 × $200), so about $20,713.58 is interest. With 2.5% inflation that balance is worth about $42,742 in today's dollars. The effective annual rate of 7% compounded monthly is 7.23%.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both your original money and the interest it has already earned. Because each period's interest is added to the balance, growth speeds up over time, unlike simple interest, which is only paid on the original amount.
How often should interest compound?
More frequent compounding earns slightly more. At 7%, annual compounding gives an effective rate of 7.00%, monthly 7.23% and daily 7.25%. The difference is small compared with the rate itself, how much you contribute and how long you stay invested.
Does it matter if I contribute at the start or end of the month?
Yes, a little. Deposits at the start of the month earn one extra month of interest each, so the final balance is higher. Over 10 years at 7% with $200 a month the difference is about $200.
What is the rule of 72?
Divide 72 by the annual rate to estimate how many years it takes money to double. At 8% that is about 9 years. The calculator shows the exact doubling time from the effective annual rate.
What rate should I use for stocks?
No rate is guaranteed. The US stock market has historically returned roughly 10% a year before inflation over long periods, but individual years vary widely and past returns do not predict future ones. Many people plan with a more conservative 5% to 7%.
Does this include taxes and fees?
No. Interest in taxable accounts is usually taxed each year, and fund fees reduce returns. To approximate them, lower the rate by your expected fee percentage and tax drag.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.