Compound Interest Calculator

Read the calculator result

This calculator projects a starting balance plus regular monthly contributions under a constant annual interest-rate assumption. It separates the money you contribute from the growth produced by the model. That separation helps answer a useful question: how much of a future balance comes from saving more, and how much depends on the assumed rate and time?

The model compounds monthly and adds each contribution at the end of the month. The annual rate entered here’s a nominal rate, meaning the monthly rate is that percentage divided by 12. It isn’t an APY input. Results are before taxes, fees, and inflation, and the sample rate is illustrative rather than a current bank offer or a forecast.

The SEC’s Investor.gov compound interest calculator similarly highlights the importance of the initial amount, regular contributions, time, rate, and compounding frequency. Our example below makes the specific monthly assumptions explicit so you can understand where the numbers come from.

Compound interest: choose inputs that match your actual plan

Starting balance: enter the money already available for this goal. Avoid including funds that must be spent shortly or money earmarked for another commitment. If you’re beginning with no savings, a zero starting amount is valid; regular contributions can still build the balance.

Monthly contribution: enter an amount you expect to add consistently at the end of each month. Contributions are separate from interest. A $100 monthly contribution means $1,200 of new money each year. If your contributions are irregular, the result is an approximation of that pattern rather than an exact account forecast.

Annual nominal rate: enter a percentage consistent with monthly compounding. An account advertising APY is already expressing an annual yield that reflects compounding. Dividing that APY by 12 and compounding it again overstates the corresponding yield. Check the rate definition before entering a number.

Years: choose the period over which you expect the money to remain invested or saved. A longer horizon gives contributions and growth more time, but doesn’t make a variable return certain. If your deadline is fixed, use that deadline instead of extending the horizon until an attractive balance appears.

How the calculator works

Let P be the initial balance, C the monthly contribution, r the monthly rate, and n the number of months. With end-of-month contributions, the projected balance is P(1 + r)ⁿ + C[(1 + r)ⁿ − 1] ÷ r. The first part grows the opening balance. The second part adds the future value of all monthly contributions.

When the rate is zero, the balance is simply P + C × n. The zero-rate case is useful because it shows the outcome from contributions alone. Total contributions equal the initial balance plus all monthly additions. Modeled growth is the ending balance minus that contribution total.

The calculator applies growth before adding that month’s contribution. For a $1,000 starting balance and a nominal 5% annual rate, the first month’s modeled growth is approximately $4.17. Adding $100 at month-end produces a balance of approximately $1,104.17. The new contribution starts earning growth in the next month.

Beginning-of-month contributions would have one extra month to grow. That is a different convention and should not be mixed into a comparison without labeling it. The mathematics can describe either convention, but this tool consistently uses month-end additions.

Compound interest calculator example: $1,000 plus $100 each month

Assume you start with $1,000, add $100 at the end of every month, and earn a hypothetical nominal 5% annual rate compounded monthly for ten years. The projection contains 120 monthly contributions. You contribute $13,000 in total: the original $1,000 plus $12,000 added over the decade.

The $4,175.24 growth figure is generated by the assumptions, not a promised payment. A useful chart shows contributions and growth separately so the larger ending balance isn’t mistaken for interest alone. Actual results depend on the product, its terms, contribution timing, rate changes, taxes, and charges.

If the same saving pattern earned no interest, the ending balance would be $13,000. That provides a baseline for understanding how much of the modeled result depends on the rate. It also shows that consistent contributions do much of the work in this particular example.

Test more than one rate assumption

Keep the initial balance, contributions, and ten-year horizon fixed, then change only the nominal annual rate. At an illustrative 3%, the projected balance is approximately $15,323.50. At 5%, it is $17,175.24. At 7%, it’s approximately $19,318.14. These are alternative mathematical scenarios, not low, average, or guaranteed market outcomes.

The spread between scenarios helps show sensitivity to the rate. If a plan works only with the highest assumption, it may require larger contributions, a longer horizon, or a smaller goal. The savings goal calculator reverses this process and estimates the monthly contribution needed for a target.

Also test the contribution. A higher contribution is something you may have more direct control over than an investment return, although it must fit your budget. Check whether the chosen amount remains practical during months with annual bills, variable income, or unexpected expenses.

Nominal interest rate and APY are different

With monthly compounding, a nominal 5% annual interest rate produces an effective annual yield of approximately 5.1162%, assuming the interest stays in the account. The calculation is (1 + 0.05 ÷ 12)¹² − 1. The effective yield is slightly higher because interest itself earns interest during the year.

The CFPB’s annual percentage yield methodology explains that APY reflects the interest rate and compounding. If you have an APY rather than a nominal rate, the equivalent monthly rate is (1 + APY)^1/12 − 1, with APY expressed as a decimal. Multiply that monthly rate by 12 to obtain the equivalent nominal annual rate for this tool.

This conversion assumes a constant yield and the same reinvestment convention. Some products pay interest out instead of reinvesting it. Tiered balances, withdrawal rules, and changing rates may also require a more detailed model. Use account disclosures to identify the correct assumptions.

Account for taxes, fees, inflation, and uncertainty

The displayed ending balance is nominal dollars before taxes and fees. It doesn’t show how much you could spend after taxes or how much purchasing power those dollars will have. An account fee reduces growth, and inflation changes what a future balance can buy. Keep those effects separate instead of calling the entire projection a real return.

A smooth annual-rate model is also different from market returns that vary from year to year. A constant 5% line doesn’t show losses, volatility, or the effect of withdrawing during a downturn. If you use the tool for investment planning, label the rate as a scenario and consider several outcomes rather than treating the line as a forecast.

For money needed soon, access and product terms matter alongside yield. Emergency savings may need a different plan from a long-term investment goal. Our emergency fund calculator focuses on expenses and available reserves, rather than assuming that every savings goal should pursue the same return.

Use the projection to make a measurable plan

Record your starting balance, monthly contribution, chosen horizon, and the rate assumption used. Then choose a review interval that fits the account and the goal. A revised contribution or a changed bank rate should trigger a new calculation, rather than leaving an old projection to stand as a promise.

Compare progress with contributions as well as the total balance. If your actual deposits were lower than planned, the gap isn’t necessarily caused by investment performance. Separating these two drivers makes a review more useful and suggests which part of the plan might need adjustment.

Keep product comparisons on the same basis

When comparing accounts or scenarios, hold the contribution schedule and time horizon constant. Check whether each quoted rate is nominal interest or APY, whether interest remains in the account, and whether the quoted rate applies to the full balance. A promotional rate that lasts only a few months shouldn’t be extended across a ten-year projection without an explicit assumption.

Record costs separately when the calculator can’t model them. A result from a fee-free illustration shouldn’t be described as the expected net result from an account with recurring charges. Matching the assumptions makes differences in the projected balances easier to interpret.

Compound interest calculator questions

Does the calculator use annual or monthly compounding?

It compounds monthly and assumes contributions arrive at month-end. Enter a nominal annual rate compatible with that convention. A tool using annual compounding, daily compounding, or beginning-of-month deposits can produce a different answer even when some visible inputs look the same.

Can I start with zero dollars?

Yes. Enter zero as the starting balance and a positive monthly contribution. The tool will project the contributions and their modeled growth. If both starting balance and contributions are zero, the projected balance remains zero regardless of the entered rate.

Is the growth guaranteed?

No. This is a calculation using an assumed rate. Whether a specific product offers a contractual rate, changes its rate, or exposes your balance to market risk depends on that product. Read the terms and distinguish a mathematical scenario from an actual guarantee.

What if I withdraw money during the period?

The standard calculation doesn’t include withdrawals. Removing money changes the balance that can grow in later months. For a new estimate after a withdrawal, use the revised balance and remaining horizon. Multiple planned withdrawals need a cash-flow schedule that explicitly includes their dates and amounts.