How to use this calculator
- Initial deposit: what you’re starting with today. Use $0 if you’re starting from scratch.
- Contribution: how much you’ll add regularly, and whether that’s every month or every year. Contributions are added at the end of each period.
- Annual interest rate: the APY on a savings account or CD, or an expected average return for investments.
- Years: how long the money stays invested.
- Open More options to change the compounding frequency or show the result in today’s dollars after inflation.
The chart splits your balance into what you put in and what interest earned. The table shows the balance at the end of every year.
The compound interest formula
For a single deposit, compound interest follows this formula:
- A is the final amount
- P is the starting principal
- r is the annual interest rate as a decimal (7% = 0.07)
- n is how many times interest compounds per year (12 for monthly)
- t is the number of years
Example: $10,000 at 7% compounded monthly for 10 years is 10,000 × (1 + 0.07/12)^120 ≈ $20,097. You earn $10,097 in interest without adding another dollar.
With regular contributions, each deposit compounds from the day it’s made. The calculator handles this by applying the rate period by period, which also lets it build the year-by-year table.
Simple vs. compound interest
Simple interest is paid only on the original amount. Compound interest is paid on the original amount plus the interest you’ve already earned. Over 10 years at 7%, the difference on $10,000 is:
| Method | Balance after 10 years | Interest earned |
|---|---|---|
| Simple interest | $17,000 | $7,000 |
| Compounded annually | $19,672 | $9,672 |
| Compounded monthly | $20,097 | $10,097 |
| Compounded daily | $20,136 | $10,136 |
The longer the time frame, the wider that gap becomes.
Why starting early matters most
Time is the most powerful input in the formula because it sits in the exponent. Investing $500 a month at 7%:
| Years invested | You contribute | Ending balance |
|---|---|---|
| 10 years | $60,000 | $86,542 |
| 20 years | $120,000 | $260,463 |
| 30 years | $180,000 | $609,985 |
Tripling the time from 10 to 30 years multiplies the result by about seven. Someone who invests $300 a month from age 25 to 65 at 7% ends up with about $787,000. Starting at 35 instead leaves about $366,000: less than half, from just ten fewer years.
How to make compounding work harder for you
- Start now, even with small amounts. Every year of delay costs compounding time you can’t get back.
- Automate contributions so they happen every month without a decision.
- Reinvest earnings. Interest and dividends you withdraw stop compounding.
- Mind the fees. A 1% annual fee comes straight off your rate of return and compounds against you for decades.
- Use tax-advantaged accounts like a 401(k) or IRA so taxes don’t take a cut each year.
APY vs. APR
Banks advertise savings accounts and CDs by APY (annual percentage yield), which already includes the effect of compounding. If an account pays 4.00% APY, enter 4 and choose annual compounding to match it exactly. Loans are usually quoted as APR, which does not include compounding, so the true cost is slightly higher than the APR suggests. The “Effective annual yield” figure in the results converts any rate and compounding frequency into its APY.
Things this calculator doesn’t include
Results assume a constant rate of return and contributions made on schedule. Real investment returns go up and down, and taxes on interest in ordinary accounts reduce what you keep. For bank accounts, use the advertised APY. For investments, treat the result as a projection, not a promise.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both your original money and on the interest it has already earned. Each period, interest is added to your balance, so the next period's interest is calculated on a bigger number. Over long periods this snowball effect usually ends up larger than the money you put in.
How is compound interest calculated?
For a single deposit, the future value is A = P(1 + r/n)^(nt), where P is the deposit, r is the annual rate as a decimal, n is the number of times interest compounds per year and t is the number of years. With regular contributions, each deposit grows the same way from the date it's added, and the calculator adds them all up.
How much will $10,000 grow in 10 years?
At a 7% annual rate compounded monthly, $10,000 grows to about $20,097 in 10 years with no further deposits. At the same rate compounded once a year it grows to about $19,672, and with simple interest only to $17,000.
Does compounding frequency matter much?
Less than most people expect. Moving from annual to monthly compounding at 7% adds about 0.23 percentage points of effective yield. The rate itself, how much you contribute and how long you stay invested matter far more.
What rate of return should I use?
Use the actual APY for savings accounts and CDs. For long-term stock investments, many planners use a conservative 5% to 7% real (after-inflation) return, but actual returns vary year to year and are never guaranteed.
What is the Rule of 72?
Divide 72 by your annual interest rate to estimate how many years it takes money to double. At 6%, money doubles in roughly 12 years; at 9%, about 8 years. It's a quick mental shortcut, and the calculator shows the estimate for your rate.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.