Compound Interest Calculator
Calculate compound interest with monthly contributions. See year-by-year growth breakdowns.
| Year | Balance | Interest (Year) | Contributions |
|---|---|---|---|
| 1 | $13,216 | $816 | $12,400 |
| 2 | $16,664 | $1,048 | $14,800 |
| 3 | $20,362 | $1,298 | $17,200 |
| 4 | $24,327 | $1,565 | $19,600 |
| 5 | $28,578 | $1,852 | $22,000 |
| 6 | $33,137 | $2,159 | $24,400 |
| 7 | $38,026 | $2,488 | $26,800 |
| 8 | $43,268 | $2,842 | $29,200 |
| 9 | $48,888 | $3,221 | $31,600 |
| 10 | $54,916 | $3,627 | $34,000 |
The Compound Interest Formula
The standard formula is A = P(1 + r/n)^(nt), where P is the principal, r the
annual interest rate, n the compounding frequency, and t the number of years. This calculator
extends the formula to include regular monthly contributions, which accelerate growth
significantly over time.
Why Compounding Frequency Matters
Monthly compounding earns interest on the previous month's interest, not just the original deposit. At 7% annual interest on $10,000 over 30 years, monthly compounding produces about $1,400 more than annual compounding. Daily compounding adds another $100 beyond monthly. The differences grow with larger balances and longer time horizons.
The Power of Regular Contributions
Investing $200 per month at 7% annual return for 30 years turns $72,000 in contributions into over $240,000 — more than three times the amount deposited. Starting five years earlier with the same monthly amount would push the total past $360,000. Time amplifies every dollar contributed. If you're planning a home purchase alongside your investments, use the Mortgage Calculator to estimate monthly mortgage payments.
Frequently Asked Questions
- What interest rate should I use?
- The S&P 500 has averaged roughly 10% annual return before inflation (about 7% after inflation) over the past century. High-yield savings accounts currently offer 4-5%. Use a rate that matches your specific investment or account.
- Does this calculator account for taxes?
- No. This tool shows raw compound growth. Tax-advantaged accounts (401k, IRA, Roth IRA) defer or eliminate taxes on gains. Taxable brokerage accounts reduce returns by your marginal tax rate on dividends and capital gains.