Finance
Compound Interest Calculator
Works compound interest, where time matters more than rate.
Result
Assumes a constant return every year, which no real investment delivers. Returns are also shown before tax, fees and inflation. The inflation calculator shows what the end balance is worth in today's money.
Get a Free Business AuditHow the calculation works
The principal grows by the rate each period and the following period's growth applies to the larger balance, which is what distinguishes compounding from simple interest. Compounding frequency affects the result, and over long periods the number of periods dominates the outcome more than the rate does.
What moves the number
- Rate and the compounding frequency.
- Time, which has the largest effect over long periods.
- Whether contributions are added periodically.
- Fees, which compound against the balance.
Where this one goes wrong
Fees compound in exactly the same way as returns, which means a modest annual charge removes a substantial share of a long-horizon balance, and that effect is invisible in any single year. Model it. Compounding frequency is a smaller effect than people expect compared with the rate and the period, so the practical lesson of this arithmetic is about time rather than about finding a slightly better rate.
Before you quote
- Model fees as compounding against the balance.
- State the compounding frequency used.
- Test a lower rate, since the output follows the assumption.
Questions
About this calculator
What matters most in compounding?
Time, over long periods, more than the rate. The number of compounding periods dominates the outcome, which is why starting earlier generally beats finding a slightly better rate later by a wide margin.
Do fees matter much?
More than they look, because they compound against the balance exactly as returns compound for it. A modest annual charge removes a substantial share of a long-horizon balance, and the effect is invisible in any single year.
Does compounding frequency make a big difference?
Less than most people expect relative to the rate and the period. Moving from annual to monthly compounding changes the result modestly; doubling the time period changes it dramatically.
The formula
A = P(1 + r/n)^(nt) + contributions compounded over the same periods
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How to use this calculator
- Starting amount ($). Enter your own figure; the page starts at $10,000.
- Monthly contribution ($). Enter your own figure; the page starts at $500.
- Annual return (%). Enter your own figure; the page starts at 7%.
- Years. Enter your own figure; the page starts at 20.
- Compounding. Enter your own figure; the page starts at Monthly.
The result updates as you type, so you can try a figure, see what it does to balance at the end, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Starting amount | $10,000 |
| Monthly contribution | $500 |
| Annual return | 7% |
| Years | 20 |
| Compounding | Monthly |
What comes out
| Result | Value |
|---|---|
| Balance at the end main result | $300,851 |
| Total you put in | $130,000 |
| Growth from compounding | $170,851 |
| Multiple of what you deposited | 2.3× |
You would put in $130,000 and finish with $300,851. $170,851 of that is growth rather than deposits.
How sensitive the answer is
Holding everything else steady and changing only starting amount, this is what happens to balance at the end. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Starting amount ($) | Balance at the end |
|---|---|
| $5,000 | $280,657 |
| $7,500 | $290,754 |
| $10,000 example above | $300,851 |
| $15,000 | $321,044 |
| $20,000 | $341,238 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Starting amount ($)
- A money amount, starting at $10,000.
- Monthly contribution ($)
- A money amount, starting at $500.
- Annual return (%)
- A percentage, between 0 and 100, starting at 7%.
- Years
- A number, between 0 and 80, starting at 20.
- Compounding
- Choose from Monthly, Quarterly, Annually, Daily.
What the results tell you
| Result | What it is |
|---|---|
| Balance at the end | The headline result. A money figure. |
| Total you put in | A money figure. |
| Growth from compounding | A money figure. |
| Multiple of what you deposited | A number. |
Rates and terms move
Loan and interest figures assume the rate and term you enter hold for the whole period. Variable rates, fees rolled into the balance and early-repayment terms all change the real cost.
Keep going
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