Compound Interest Calculator
See how your investments grow over time with compound interest. Compare different rates, add monthly contributions, and visualize the power of compounding.
How It Works
Enter your starting balance, monthly contribution, expected annual return, and time horizon to see how compound interest grows your money. The chart separates what you contributed from what interest actually earned you, and you can compare two return rates side by side.
Formula
FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]
Where: FV = future value | P = initial principal | r = annual interest rate (decimal) | n = compounding periods per year | t = years | PMT = regular contribution per compounding period.
Worked Example
Investing $10,000 with $300/month contributions at 7% for 20 years
- Initial investment: $10,000
- Monthly contribution: $300 (compounded monthly)
- Annual return rate: 7%
- Time horizon: 20 years
- Total contributed: $10,000 + ($300 × 240 months) = $82,000
- Projected final balance ≈ $170,000
- Interest earned ≈ $88,000 — more than your total contributions
Common Mistakes
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Underestimating the impact of starting early
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Because interest compounds on interest, an investor who starts 10 years earlier with smaller contributions often ends up with more money than one who starts later with larger contributions.
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Using an unrealistic return rate
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Historical US stock market average returns are roughly 7-10% before inflation. Using overly optimistic rates (15%+) for long-term projections will overstate your future balance significantly.
Frequently Asked Questions
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DisclaimerThe results provided by this calculator are estimates and for informational purposes only. They do not constitute financial, legal, or professional advice. Please consult with a qualified professional for your specific needs.