Estimate how a starting balance grows over time with compounding interest and optional monthly contributions.
Compound interest means the interest you earn also earns interest, so a balance grows faster than with simple interest. For a lump sum, the formula is A = P × (1 + r/n)nt, where P is the starting amount, r is the annual rate, n is how many times a year interest compounds, and t is the number of years. The calculator applies that formula to your starting amount, then adds the future value of a series of equal monthly contributions made at the end of each month.
The compounding frequency changes how often interest is calculated and added to your balance. More frequent compounding (daily vs. annually) produces a slightly higher return on the same nominal rate, since interest starts earning interest sooner. The effective annual yield in the results shows what your rate really amounts to after compounding, and the years-to-double figure shows how long it takes for a balance to grow to twice its size at that yield.
Because inflation erodes what money can buy, the calculator also shows your ending balance in today's dollars, using the inflation rate you enter. That is a more realistic picture of what your savings will be worth.
Say you start with $5,000, add $200 every month, and earn 6.5% a year compounded monthly. After 10 years you would have $43,241.55. Of that, $24,000 came from your own monthly contributions and $14,241.55 came purely from interest. The effective annual yield is 6.70%.
Stretch the same plan out to 20 years, and you would have $116,366. Interest alone accounts for about $63,366 of that, more than the $53,000 you would have actually put in by then ($5,000 plus $48,000). That gap is compounding at work: money left in longer earns interest on a bigger and bigger base. The share of your balance that comes from interest keeps climbing as the years pass:
Less than most people expect. Here is what $10,000 grows to over 10 years at a 6% annual rate:
Going from annual to daily compounding adds about 1.7% to the final balance. The interest rate itself and how long the money stays invested matter far more. For example, on $5,000 plus $200 a month over 20 years, a 4% return grows to about $84,500, a 6% return to about $109,000, and an 8% return to about $142,400.
The earliest contributions have the most time to compound, and that can outweigh contributing for longer. Compare two savers who each earn 7% a year with monthly compounding and save $300 a month:
Saver A puts in half as much money and still ends up with about $53,400 more. Starting five years earlier helps too. Saving $200 a month at 6.5% for 25 years grows to about $149,800, compared with about $98,100 for 20 years.
A quick mental shortcut for compound interest is the Rule of 72: divide 72 by your annual interest rate to estimate how many years it takes an amount to double. At 6% a year, money roughly doubles every 12 years (the exact figure is 11.9). At 9%, it doubles closer to every 8 years. It is not exact, but it is a handy way to sanity-check any long-term projection, and the calculator's own years-to-double figure gives the precise answer.
The same math that grows savings makes debt more expensive. Credit card balances compound too, which is why paying only the minimum takes so long. Use the Credit Card Payoff Calculator to see the cost, and the personal loan calculator to compare it with a fixed-rate loan.
For a savings goal with a deadline, try the savings goal calculator. To plan for retirement, use the retirement calculator, and to compare investment scenarios, use the investment calculator. To decide how much of your income to set aside, see the budget calculator.
Does this account for taxes or inflation?
It does not model taxes. The ending balance is before taxes on any gains. Inflation is shown separately: the "balance in today's dollars" row adjusts the result using the inflation rate you enter, so you can see the purchasing power behind the number.
Are contributions added at the start or end of each period?
This calculator assumes contributions are made at the end of each month, which is the common convention for savings and retirement accounts.
Can I use this for a loan instead of savings?
This tool models growth of a balance, not loan amortization. A dedicated loan or mortgage calculator will give you accurate payment schedules.
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal for the entire term, so it grows in a straight line. Compound interest is recalculated on the principal plus any interest already earned, so it grows faster the longer the money stays in place. Over short periods the difference is small; over decades it can be substantial.
How much does compounding frequency actually change my results?
Less than most people expect. On a $10,000 balance at 6% for 10 years, moving from annual to daily compounding changes the final result by roughly 1.7%, not a dramatic amount. The interest rate itself and how long the money stays invested matter far more than how often it compounds.
Is it better to invest a lump sum or contribute monthly?
A lump sum invested today has more time to compound than the same total amount spread across years of monthly contributions, so all else being equal it tends to end with a higher balance. For instance, $24,000 invested up front at 6.5% grows to about $45,900 in 10 years, versus about $33,700 for $200 a month over the same period. In practice most people do not have the full amount available up front, which is why this calculator supports both a starting amount and ongoing monthly contributions.
Does starting a few years earlier really make a noticeable difference?
Yes, more than most people expect, because the earliest contributions have the most time to compound. Try changing the "Time (years)" field above by just five years and watch how much the total interest earned changes. That gap is the real cost of waiting to start.
What interest rate should I use?
Use the rate that matches where the money will be. Savings accounts and certificates of deposit pay a stated rate, which you can enter directly. Investments such as stock funds have no guaranteed return, and their results vary widely from year to year. For those, try a range of rates, for example 4%, 6%, and 8%, and treat the results as scenarios rather than predictions.