Compound Interest Calculator
Compound interest is what turns a steady habit into a large number. Each period you earn a return on your original balance, and in the next period you earn a return on that return as well. The effect is nearly invisible over one year and enormous over thirty, which is why the two variables that matter most are the rate and the number of years the money stays invested.
This calculator projects a future value from an initial balance, an optional regular contribution, an annual rate and a horizon. It separates the two sources of growth: the money you put in, and the money the market added on top. Seeing total contributions beside total interest earned is the clearest way to understand that the later years do most of the work, because by then the balance being compounded is large.
Compounding frequency changes the result, but less than most people expect. Daily compounding on a 6% rate yields about 6.18% a year, while annual compounding yields 6.00%. The difference is real but small next to the difference between a 4% and an 8% rate, or between investing for ten years and for thirty. Time and rate dominate frequency.
The projection assumes a constant rate, which no real investment delivers. Markets fall as well as rise, and a sequence of poor early returns can permanently lower a portfolio even if the long-run average is unchanged. Treat the output as a long-run planning estimate, not a forecast, and revisit the assumptions whenever your situation or the rate environment changes.
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How the math works
- Future value with contributions = present value × (1 + i)^N + contribution × ((1 + i)^N − 1) / i, where i is the periodic rate and N the number of periods.
- The periodic rate is the annual rate divided by the compounding frequency; contributions are treated as deposits made at the end of each period.
- Total contributions are the starting balance plus every deposit; interest earned is the future value minus total contributions.
- The effective annual yield is (1 + annual rate ÷ frequency)^frequency − 1, which shows what a nominal rate really pays when compounding is more frequent than annually.
Frequently asked questions
What is compound interest?
How much difference does compounding frequency make?
What is the rule of 72?
Should my contributions be monthly or annually?
Does this account for inflation or taxes?
Why is my actual result different from the projection?
This calculator is an educational estimator. It is not financial, medical, tax, or legal advice, and it does not account for fees, local rules, or your personal circumstances. Confirm decisions with a qualified professional.