How to use the compound interest calculator
- Enter what you have saved today, or zero if you are starting from scratch.
- Add the amount you plan to deposit every month.
- Set the annual interest rate or expected return, and how many years the money will stay invested.
- Pick how often interest compounds. Savings accounts usually compound daily or monthly; many bonds compound semi-annually.
- Choose whether deposits land at the start or end of each month, then read the balance, the deposit and interest split, and the yearly table.
The compound interest formula, step by step
Compound interest means you earn interest on past interest, not only on what you deposited. The starting balance and the monthly deposits are handled separately and then added together:
The monthly rate i is the rate that, compounded 12 times, gives the same growth as compounding n times a year. With monthly compounding, i is simply r ÷ 12. Deposits made at the start of the month earn one extra month of interest, so that part is multiplied by (1 + i).
Worked example
You start with $5,000 and add $200 at the end of every month for 20 years at 7%, compounded monthly. Here i = 0.07 ÷ 12 = 0.0058333.
The balance reaches $124,379.03. Your own deposits total $53,000.00 ($5,000 plus 240 × $200), so $71,379.03 is interest. From year 9, the interest earned each year ($2,563.77) is more than the $2,400 you deposit, and by year 17 total interest has passed total deposits. Moving the deposits to the start of each month raises the final figure to $124,986.77.
Does compounding frequency matter?
Less than most people expect. Here is $10,000 left for 10 years at 5%:
| Compounding | Balance after 10 years |
|---|---|
| Annually | $16,288.95 |
| Quarterly | $16,436.19 |
| Monthly | $16,470.09 |
| Daily | $16,486.65 |
Moving from monthly to daily adds $16.56 over a decade. The rate and the number of years have a far bigger effect, which is why comparing accounts by APY (in the UK, AER) makes sense: it already folds compounding into one number.
Key features
- Five compounding options, from daily to annual.
- Start-of-month or end-of-month deposits.
- APY and a rule-of-72 doubling estimate.
- Year-by-year table and chart that separate deposits from interest, with CSV export.
Practical use cases
Comparing savings accounts. US banks must quote APY under the Truth in Savings Act, and UK banks quote AER. Enter the advertised rate with the stated compounding to check the figure.
Tax-free growth. Money in a Roth IRA, a UK ISA or a Canadian TFSA compounds without annual tax on the interest, so these results come close to what you keep. In a taxable account, lower the rate by your tax on interest for a fairer estimate.
Setting a monthly target. Adjust the monthly deposit until the balance reaches a goal, such as a house deposit in five years.