Compound Interest Calculator
A starting amount plus monthly contributions, compounding every month.
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Final balance—
Growth multiple—
Total contributed—
Interest earned—
Why compound interest behaves the way it does
Simple interest pays you on your original deposit only. Compound interest pays you on your deposit and on every unit of interest already credited, so the base your returns are calculated from keeps expanding. The effect is barely noticeable in year one and dramatic by year twenty-five.
This calculator handles the version most people actually need: a starting balance plus regular monthly additions, all compounding monthly. That combination is how most savings accounts, retirement contributions, and index-fund portfolios genuinely behave.
The formula
Because there are two moving parts, the result is the sum of two calculations. The starting amount grows on its own:
A = P × (1 + i)n
And each monthly contribution forms an annuity:
A = C × ((1 + i)n − 1) / i
Here i is the annual rate divided by 12 and n is the number of months. The calculator runs the two together month by month, which handles any combination of starting balance and contribution correctly.
A worked example
Start with 1,00,000, add 10,000 every month, and assume 8% annually over 20 years. You will have contributed 25,00,000 in total — the original 1,00,000 plus 240 monthly deposits. The projected balance is approximately 63,80,000, meaning compounding contributed close to 39,00,000.
Now try the experiment that makes the point. Keep every input the same but change the term to 25 years. Contributions rise by 6,00,000, but the balance rises to roughly 1,00,50,000 — an increase of about 36,70,000. The final five years generated almost as much growth as the first twenty combined.
Frequency matters more than people expect
The same nominal rate produces different results depending on how often interest is credited. At 10% on 1,00,000 over one year: annual compounding gives 10,000 of interest, quarterly gives 10,381, monthly gives 10,471, and daily gives 10,516. The gaps look small over one year and widen considerably over twenty. When comparing products, look for the effective annual rate rather than the headline nominal rate, since that figure already accounts for compounding frequency.
Using this for real decisions
The most valuable thing this calculator does is quantify the cost of waiting. Run your intended plan starting today, then run it again starting five years from now with the same monthly amount and the same end date. The difference is what a five-year delay costs, and it is almost always larger than people guess.
One caution: the calculator applies a constant rate. Savings accounts have variable rates, and investment returns are anything but constant. Use a conservative figure, and re-run the projection every year or two with your actual balance rather than trusting a projection made a decade ago.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal for the entire term. Compound interest is calculated on the principal plus all previously credited interest, so the balance grows faster over time. On a 1,00,000 deposit at 10% for 10 years, simple interest yields 1,00,000 of interest while annual compounding yields about 1,59,400.
How often does this calculator compound?
Monthly, which matches how most savings accounts and investment contributions work in practice. Products that compound quarterly or annually will produce slightly different results for the same headline rate.
What is the rule of 72?
A shortcut for estimating how long money takes to double: divide 72 by the annual return rate. At 8%, money doubles in roughly nine years; at 12%, in roughly six. It is an approximation but accurate enough for mental arithmetic in the 6–15% range.
Does inflation affect these results?
The projection shows nominal value, not purchasing power. If your money grows at 8% while inflation runs at 6%, your real return is closer to 2%. Run the final figure through the inflation calculator to see what it would actually buy.
Can I model an increasing contribution?
Not directly — this calculator assumes a flat monthly amount. To approximate a rising contribution, run the calculation in segments: use your current amount for the first few years, then take that closing balance as the starting amount for a second run at the higher contribution.