Compound Interest Calculator
The eighth wonder of the world, according to someone who knew a thing or two about math. Watch your money snowball — principal, monthly contributions, rate, years.
How to use
- Enter your starting amount. That's the lump sum already sitting in the account — use 0 if you're starting from scratch.
- Add a monthly contribution. Whatever you can reliably put in each month; consistency beats size here.
- Set the rate and time. Use an expected annual return (7% is the classic long-run stock market figure, savings accounts are far lower) and how many years you'll let it grow.
- See the snowball. The future value shows where you end up; the interest figure shows how much of it your money earned on its own. Bump the years to see time do its thing.
Frequently asked questions
How does compound interest work?
Compound interest means you earn interest not just on your original money, but on the interest it already earned — so growth accelerates over time. With monthly compounding, each month's interest is calculated on the previous month's balance plus all prior interest. That's why starting early matters more than starting big: time is the multiplier.
What is the compound interest formula?
For a lump sum: A = P × (1 + r)^n, where P is the principal, r is the rate per compounding period, and n is the number of periods. With monthly contributions, each contribution compounds separately: this calculator adds each month's contribution at month-end and compounds the whole balance monthly. For $10,000 at 7% annual (compounded monthly) plus $500/month for 20 years, the future value is about $300,850 — roughly $130,000 of your own contributions plus $170,850 of growth.
Is it better to invest a lump sum or contribute monthly?
A lump sum invested today beats the same total contributed gradually, because every dollar gets maximum compounding time. But most people don't have a lump sum sitting around — monthly contributions are how real savings happen, and they're still powerful. The honest answer: invest whatever you can, as early as you can, and don't stop. Compare both scenarios in the calculator to see the difference.
Does this account for inflation or taxes?
No — the projection is in nominal dollars, before taxes and inflation. A 7% return with 3% inflation is roughly 4% in real purchasing power. Investment gains are also taxed depending on the account type (401(k), IRA, and regular brokerage accounts all differ). Treat the result as the growth of the money itself, then mentally discount for inflation.
Related tools
Keep the momentum going.