Compound Interest Calculator

Compound interest means you earn interest on your interest, and over a long stretch that does most of the work. Enter a starting sum, a monthly deposit, a yearly rate and the number of years, and this calculator shows the final balance, how much of it you actually paid in, how much came from interest, and a year-by-year table so you can see the curve steepen.

How to use it

1. Enter your starting amount and what you'll add each month.
2. Type the yearly interest rate and the number of years.
3. Choose how often interest is added, from yearly up to daily.
4. Read the totals and scroll the yearly breakdown.

When it helps

• Planning savings or investment growth over a decade or more.
• Seeing what a regular monthly deposit adds up to.
• Comparing the cost of starting five years later.
• Understanding why debts at high interest grow so fast.

Good to know

• Try changing only the years and watch the total. Time usually matters more than the rate or the deposit.
• More frequent compounding adds a little, but daily versus monthly makes little real difference.
• It assumes a steady rate. Real investments swing up and down, so treat the result as a planning figure, not a forecast.

The formula behind it

The balance after n compounding periods is the starting amount multiplied by one plus the periodic rate, raised to the power n. With regular deposits, each deposit grows for the time it stays invested, and the sum of those growing deposits is added to the total. This tool simulates it month by month, so deposits are added at the end of each month.

Compounding more often than once a year raises the effective rate slightly. A 6 percent nominal rate compounded monthly gives an effective yearly rate of about 6.17 percent, and daily compounding gives 6.18.

Worked example: ten years of saving

Start with 5,000, add 200 each month at 6 percent a year for 10 years, compounded monthly. You pay in 29,000 in total (5,000 plus 24,000 of deposits) and end up with about 41,873, so roughly 12,873 is interest. Over the first years, deposits do most of the work, and later the interest takes over.

Extend it to 30 years and the balance exceeds 230,000 from the same monthly deposit, showing the power of time.

The rule of 72

A quick mental estimate: divide 72 by the yearly rate to find how many years it takes to double. At 6 percent, money doubles in about 12 years, at 8 percent in about 9, and at 3 percent in 24. The rule works well for rates between about 2 and 12 percent.

It also works for debts: a credit card at 24 percent doubles what you owe in three years if you make no payments.

Real-world adjustments

Investments rarely deliver a steady rate. Returns vary each year, fees reduce them, taxes take a share, and inflation erodes the purchasing power of the final sum. To model inflation, use a rate that's the nominal return minus expected inflation.

Savings accounts, bonds, shares and property all behave differently, so use this tool for rough planning rather than precise prediction.

Questions