About this tool
Why it exists.
Compound interest means you earn interest on your interest. Over a few years the effect is modest, but over decades it becomes large, which is why starting early matters so much for savings and pensions.
Enter a starting amount, an optional monthly contribution, the yearly interest rate, the number of years and how often interest compounds. The calculator steps month by month and shows the final balance, the total you put in and the interest earned. It assumes a constant rate, so real investments, which move up and down, will differ.
How to use it.
- Enter your starting amount and monthly contribution.
- Enter the interest rate, number of years and compounding frequency.
- Read the final balance, total contributions and interest earned.
Good questions.
What is the compound interest formula?
For a lump sum, A = P × (1 + r ÷ n)^(n × t). For example, 1,000 at 5% compounded annually for 10 years grows to about 1,628.89.
How much does compounding frequency matter?
Less than the rate and the time. Monthly compounding gives slightly more than annual compounding at the same rate, but a higher rate or a longer period changes the result far more.
Does the result include tax, fees or inflation?
No. It is a simple illustration with a fixed rate. Fees, tax and inflation reduce real returns, so treat the result as a guide, not a forecast.