Savings & Investing
Compound Interest Calculator
See what a lump sum plus steady monthly deposits becomes over time, and exactly how much of the final amount is interest you earned rather than money you put in.
Future value
Press calculate to see the growth breakdown.
You contributed — · Interest earned —
How compound interest works
Simple interest pays you only on the money you put in. Compound interest pays you on your money plus all the interest it has already earned, which is why balances curve upward instead of growing in a straight line. This calculator applies that idea at the frequency you choose. Each period, the balance is multiplied by (1 + annual rate ÷ periods per year), and your monthly contribution is added in along the way. Compounding daily rather than annually produces a slightly higher result at the same headline rate, and the calculator converts your chosen rate into the effective annual rate so you can compare offers honestly: a savings account advertising 4.9% compounded daily actually earns about 5.02% over a year.
The formula for a lump sum is future value = principal × (1 + r ÷ n) raised to (n × years), where r is the annual rate and n is the number of compounding periods a year. Regular deposits use the companion formula for a series of payments, then the two results are added together. What usually surprises people is the split shown in the bar above. In the early years, almost everything in the account is money you deposited. Somewhere in the second decade, at typical market returns, the interest slice overtakes the contribution slice, and from then on the account grows more from its own earnings than from anything you add. That crossover point is the practical meaning of "letting your money work for you," and it arrives years earlier if you start sooner, even with smaller deposits.
Practical tips for growing savings faster
Time in the account beats the size of the deposit: starting five years earlier at $200 a month usually beats starting later at $300. Raise contributions on a schedule, for example every time your pay rises, rather than waiting until you feel you can afford a large amount. Keep fees and taxes in view, because a 1% annual fee quietly removes roughly a fifth of a 30-year balance. And compare savings accounts by effective annual yield (APY), not the headline rate, since compounding frequency is already baked into APY. Finally, keep a separate emergency fund in an ordinary savings account; the growth in this calculator only materializes if the money is left alone long enough to compound.
Frequently asked questions
How often should interest compound?
More frequent compounding gives a slightly higher return at the same rate. Daily versus annual compounding typically adds a few tenths of a percent over a year, which matters over decades but should not be the main reason you choose an account.
What rate should I use for investments?
US stocks have returned roughly 10% a year on average over long periods before inflation, and balanced portfolios less. Use a cautious figure like 6–7% for planning, and never treat any return as guaranteed.
Why is the interest slice so large after 20 years?
Because interest itself starts earning interest. By the later years, each year's growth is calculated on the full accumulated balance, not just on what you deposited.
Does this account for inflation or taxes?
No. The future value is nominal. As a rough adjustment, subtract expected inflation (often around 3%) from your rate to see growth in today's buying power, and remember that interest and gains may be taxed.