Compound Interest Calculator

What is compound interest?

Compound interest is interest earned on both the original principal and the interest that has already been added to the balance. Over time, the balance can grow faster than with simple interest because each period's interest is calculated on a larger amount.

How to use this calculator

1. Enter the amount you start with.
2. Enter any amount you add each month.
3. Enter the investment term in years and months.
4. Enter the annual interest rate.
5. Choose how often interest compounds.
6. Choose whether monthly contributions are made at the beginning or end of each month.
7. Click Calculate to see the future value and annual growth schedule.

Compound interest formula

For a lump sum with no contributions:

A = P × (1 + r / n)^(n × t)

P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the term in years.

For monthly contributions, the calculator converts the compounding frequency to an effective monthly rate and adds each contribution at the chosen timing. With end-of-month contributions, the future value is:

FV = P × (1 + i)^m + C × (((1 + i)^m − 1) / i)

i is the effective monthly rate, m is the number of months, and C is the monthly contribution. If contributions are made at the beginning of each month, the contribution portion is multiplied by (1 + i).

What the results include

• Future value: the estimated balance at the end of the term.
• Total contributions: the initial investment plus all monthly contributions.
• Total interest: the future value minus total contributions.
• Annual growth schedule: yearly contributions, interest, and ending balance.
• Growth chart: balance, cumulative contributions, and cumulative interest over time.

Frequently asked questions

What is the difference between APR and APY?

APR is a nominal annual rate that does not account for compounding within the year. APY is the effective annual rate after compounding is included. More frequent compounding produces a higher APY at the same stated APR.

Does it matter when I contribute each month?

Yes. A contribution made at the beginning of the month earns interest for that month, so beginning-of-month contributions produce a slightly higher future value than end-of-month contributions.

Does this calculator include taxes or fees?

No. It shows the growth of principal and contributions before taxes, account fees, and investment expenses. Actual returns can be higher or lower than the estimate.

Can I use this for a savings account or an investment account?

Yes. The calculator models a constant interest rate, so it is useful for savings accounts, certificates of deposit, and simple long-term projections. Investment returns vary, so treat the result as an estimate rather than a guarantee.

Source

References:

• Investor.gov — Compound Interest Calculator
• Consumer Financial Protection Bureau — Saving

Disclaimer

This calculator is for informational and planning purposes only. It is not financial, tax, or investment advice. Actual results depend on the terms of the account or investment and may differ from the estimate.