How to use the compound interest calculator
- Enter your starting amount and any monthly contribution.
- Add your expected interest rate, the number of years, and how often interest compounds.
- See the future value, how much is your own money versus interest, and the growth chart.
What is compound interest?
Compound interest is interest earned on interest. Each period you earn interest not only on your original deposit but also on all the interest accumulated so far. Albert Einstein reputedly called it the eighth wonder of the world — and the reason is the curve above, which bends upward more steeply the longer you stay invested.
P principal r annual rate n compounds/yr t years PMT contribution
The first part grows your lump sum; the second part is the future value of your regular contributions.
Worked example
$10,000 + $500/month at 7% for 20 years
You contribute $10,000 + ($500 × 240) = $130,000 of your own money. With monthly compounding it grows to about $301,000 — roughly $171,000 of that is interest you never had to earn at work.
Frequently asked questions
Simple interest pays only on your original deposit. Compound interest pays on the deposit plus all interest already earned, so it accelerates over time.
A little. Daily compounding beats annual, but the gap is small compared with the effect of your rate, contributions and time invested.
Historic stock-market averages are often quoted around 7% after inflation, but returns vary year to year and aren’t guaranteed. Try a lower rate to be cautious.
No. It’s an educational estimate using a constant return. Real markets fluctuate. Speak to a licensed financial professional before investing.