Compound Interest Calculator
Calculate compound interest growth over time with optional deposits.
What this calculator does
This calculator projects what a balance becomes when returns are reinvested rather than withdrawn. You supply a starting amount, a rate, a time period, and optionally a regular deposit, and it returns the future value, total interest earned, total deposits made, the effective annual yield after compounding, and the time it takes your money to double.
It handles the parts most compound interest calculators skip: rate periods other than annual, deposit frequencies from daily to yearly, escalating contributions, beginning or end of period timing, and regular withdrawals. That flexibility matters because the difference between a rough answer and a useful one usually lies in those details.
When to use it
Reach for it whenever the question is what a savings or investment plan becomes over time. Sizing a retirement contribution, comparing a 4.5 percent CD against a 7 percent portfolio assumption, or testing whether an extra $200 a month meaningfully changes your position in fifteen years are all the same calculation.
It is equally useful in reverse — for deciding not to do something. Seeing that a $6,000 purchase costs roughly $23,000 of foregone balance in twenty years at 7 percent is a more concrete argument than any budgeting rule. If your question is specifically about a fixed-term deposit, a doubling time, or a nominal-versus-effective rate comparison, the CD, rule of 72, and APY calculators answer those directly.
Understanding the inputs
Rate period lets you enter a rate quoted over any interval — a 0.5 percent monthly rate converts to about 6.17 percent annually. Compound frequency then controls how often interest is credited to the balance, which is a smaller effect than most people expect.
Deposit amount and frequency are normalized to a monthly equivalent, so $100 weekly is treated as $433.33 monthly. Annual deposit increase applies from year two and models contributions that track your salary. Deposit timing decides whether money is added before or after interest accrues in each period — the same distinction as an annuity due versus an ordinary annuity, worth roughly one period's growth on every deposit.
How is this calculated?
The core formula is FV = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) − 1] / (r/n), where P is your initial investment, r is the annual interest rate, n is the number of compounding periods per year, t is the number of years, and PMT is the periodic deposit.
The calculator first converts your entered rate to an effective annual rate based on your chosen Rate Period — so if you enter a monthly rate of 0.5%, it becomes an annual rate of about 6.17% using (1 + 0.005)^12 − 1. It then applies your chosen Compound Frequency to determine how often interest is added to your balance. More frequent compounding always produces a slightly higher balance: daily compounding on a 5% annual rate yields an APY of 5.127%, versus 5.116% for monthly.
Your deposits are spread to a monthly equivalent regardless of chosen frequency, so a $100 weekly deposit is treated as $433.33 per month. If you set an Annual Deposit Increase, each year's deposits grow by that percentage from the second year onward — useful for modelling salary-linked savings.
Deposit Timing controls whether each deposit is added before or after interest accrues in a given period. Beginning-of-period deposits earn a full period of interest, while end-of-period (the default) do not — the same distinction as an annuity due versus an ordinary annuity.
A worked example
Start with $10,000, add $500 a month, and assume 7 percent compounded monthly over 20 years. The final balance is roughly $301,000. Of that, your own money accounts for $130,000 — the original $10,000 plus $120,000 of deposits — and compound growth supplies the remaining $171,000.
The shape matters more than the total. At the ten-year mark the balance is only about $107,000, meaning the second decade produced roughly $194,000 against the first decade's $97,000 from identical inputs. Cut the horizon to ten years and you keep barely a third of the outcome. Time, not deposit size, is doing most of the work here.
Limitations and assumptions
The calculator assumes a single flat rate that never varies. Real markets do not behave that way — they deliver a sequence of good and bad years, and the order of those years materially changes outcomes once you are withdrawing money. Past returns are not a forecast, and a 7 percent assumption is a planning convention, not a promise.
It also ignores taxes, fund fees, trading costs, and inflation, all of which reduce what you actually keep. Results are in nominal dollars. Treat the output as a way to compare scenarios and understand the mechanics of compounding, not as investment advice or a projection of what any specific account will be worth.
Common Questions
- What makes compound interest different from simple interest?
- Simple interest pays only on your original deposit. Compound interest pays on the deposit plus every dollar of interest already credited, so the base grows each period. Over one year the difference is trivial. Over thirty, at 7 percent, compounding turns $10,000 into about $76,000 while simple interest reaches only $31,000.
- How much does compounding frequency really matter?
- Less than most people assume. At a 5 percent nominal rate, annual compounding yields exactly 5 percent, monthly yields 5.116 percent, and daily yields 5.127 percent. The gap between monthly and daily is about a dollar per $10,000 per year. Rate and time move your balance; frequency is a rounding detail.
- Should I choose beginning or end of period deposits?
- End of period is the default and matches how most people actually invest — money arrives on payday and buys in afterward. Beginning of period gives each deposit one extra period of growth, which raises the final balance by roughly the periodic rate. Over 20 years at 7 percent that is around half a percent more.
- What return rate should I enter?
- Match the rate to the account. A savings account or CD uses its stated APY. For a diversified stock portfolio, 7 percent is a common long-run assumption before inflation, and 4 to 5 percent after. Entering 10 percent because that is the historical S&P average, before inflation and fees, will flatter the result badly.
- Why does the balance barely move in the early years?
- Because early growth is dominated by your deposits and late growth is dominated by returns. With $500 a month at 7 percent and nothing to start, year one adds roughly $6,200, of which only about $200 is growth. By year twenty a single year adds over $23,000, more than $17,000 of it growth. The curve only looks exponential once you have given it enough years.
- Does this account for taxes?
- No. Returns compound gross. In a taxable brokerage account, dividends and realized gains are taxed annually, which can reduce the effective rate by roughly one to two percentage points. In a 401(k), traditional IRA, or Roth IRA, gross compounding is realistic — which is exactly why tax-advantaged accounts matter so much over decades.
- What is the annual deposit increase field for?
- It models contributions that grow with your salary. Raising deposits 3 percent a year keeps your savings rate constant as pay rises rather than letting inflation erode it. Applied from year two onward, a 3 percent annual escalator on $500 monthly deposits adds a substantial amount over 20 years — often more than a full point of extra return.
- Can I model drawing money out as well?
- Yes. The withdrawal fields let you take a regular amount from the balance, with an optional annual increase to reflect inflation. Withdrawals are capped at the available balance so it never goes negative. This is how you sanity-check whether a pot can support a given spending level without running dry.
- Does the result account for inflation?
- No — every figure is in nominal dollars. A $300,000 balance in 20 years buys what roughly $180,000 buys today at 2.5 percent inflation. To see purchasing power directly, enter a real rate of return instead: subtract expected inflation from your nominal rate, so 7 percent becomes about 4.4 percent.