Compound Interest Calculator
See how a lump sum plus regular contributions can grow over time with compound interest.
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How compound interest works
Compound interest means you earn interest not just on your original deposit, but on all the interest you've already earned — so your balance grows faster and faster the longer it compounds. This calculator simulates that growth month by month, adding your chosen monthly contribution and applying interest at your selected compounding frequency, so you can see exactly how much of your final balance came from your own contributions versus interest earned.
The formula
Each period: balance = balance × (1 + r) + contribution, where r is the periodic interest rate. Over many periods this compounds — Albert Einstein reportedly called compound interest "the eighth wonder of the world" for exactly this reason: growth accelerates over time rather than staying flat.
Why starting early matters so much
Because compounding is exponential, money invested early has far more time to compound than money invested later — even if the later amount is larger. Try changing the "time horizon" field above while keeping contributions the same, and notice how much the final balance changes with just a few more years.
Frequently asked questions
What's a realistic interest rate to use?
Historically, diversified stock market index funds have averaged roughly 7–10% annual returns before inflation over long periods, while high-yield savings accounts and CDs typically offer lower, more stable rates. Use a rate appropriate to where the money is actually invested.
Does compounding frequency matter much?
It has a modest effect — daily compounding grows slightly faster than monthly, which grows slightly faster than annual, at the same stated rate. The much bigger levers are your contribution amount, your rate of return, and time.
What's the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal every period. Compound interest is calculated on the principal plus all previously earned interest, which is why it grows faster over time — see our Simple Interest Calculator for a direct comparison.
Should I include contributions or just a lump sum?
Both are supported — set the monthly contribution to 0 to see pure lump-sum growth, or add a contribution amount to model regular saving or investing, like a monthly transfer into a brokerage or savings account.