Compound Interest Calculator
The Compound Interest Calculator shows how your money can grow when your returns begin earning returns of their own. It is for beginners who want to see what steady monthly investing could add up to over time, and it is free with no signup.
What compound interest means
Your growth earns growth of its own. Each year starts with a bigger balance than the last, which is why starting earlier matters more than starting bigger.
What return should I use?
Many beginners model a broad stock index at roughly 7 percent a year after inflation. It is an average, not a promise, so try a lower number too and see if the plan still works.
How it works
You enter a starting balance, a monthly contribution, an expected yearly return, and the number of years you plan to invest. The calculator compounds the balance every month and shows your final total, how much of it you contributed yourself, and how much came from growth. Changing the number of years is a helpful way to see why starting early matters so much.
The formula in plain language
Each month, your balance grows by the yearly return divided by 12, and then your monthly contribution is added, which repeats for every month you invest.
A worked example
If you start with $1,000, add $200 every month, and earn 7 percent a year for 20 years, you contribute $49,000 of your own money and the calculator estimates a final balance of about $108,224, which means roughly $59,224 came from growth.
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Frequently Asked Questions
How does compound interest actually work?
Compound interest means your returns start earning their own returns. If you invest $1,000 and it grows 8% in year one, you have $1,080. In year two the 8% applies to $1,080, not $1,000. Repeated over decades, most of your final balance comes from growth on growth, not from the money you put in.
What return rate should I use for a compound interest calculation?
For a diversified stock index fund, 7% to 10% is the range most people model, because the S&P 500's long-run average is roughly 10% before inflation and about 7% after inflation. Past returns don't guarantee future returns, so run a conservative number (6-7%) and an optimistic one (10%) and plan around the lower figure.
Is it better to invest a lump sum or contribute monthly?
Mathematically, money invested earlier has more time to compound, so a lump sum invested today usually ends higher. Practically, most beginners don't have a lump sum, consistent monthly investing (dollar-cost averaging) is what actually builds the balance, and it removes the pressure of timing the market.
What is the compound interest formula?
For a starting balance with regular monthly contributions: FV = P × (1 + r)^n + C × [((1 + r)^n − 1) ÷ r], where P is your starting amount, C is your monthly contribution, r is your annual return divided by 12, and n is the number of months.
How long does it take to double my money?
Use the Rule of 72: divide 72 by your annual return percentage. At 8% a year, money doubles in about 9 years. At 6%, about 12 years. At 10%, roughly 7 years.
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For educational purposes only. Not financial advice.