Investing Basics 9 min read
Compound Interest Explained: The Math That Builds Wealth
Compound interest is how ordinary savers build extraordinary wealth. See the formula, worked dollar examples, and how compounding frequency changes results.
Compound Interest Calculator
Calculate how your savings or investments grow with compound interest and monthly contributions. Free, instant, and private — runs entirely in your browser.
Compound Interest Calculator
See how your money can grow with compounding and regular contributions.
Future value
$0
Total contributed
$0
Interest earned
$0
How to use this calculator
Enter your initial deposit, the amount you plan to add each month, an annual interest rate, and how many years you'll let the money grow. The calculator compounds monthly and updates instantly.
The formula behind the numbers
Each month your balance is multiplied by (1 + r/12), where
r is the annual rate, and then your monthly contribution is
added. Repeating this for every month produces the future value — the same
math banks and brokerages use for monthly compounding.
Want to understand why the growth curve bends upward so sharply in later years? Read our full guide to how compound interest works.
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both your original deposit and on the interest that deposit has already earned. Over long periods this creates accelerating, snowball-like growth.
How often does this calculator compound?
It compounds monthly, which closely matches how most savings accounts and index fund returns are modeled. Contributions are added at the end of each month.
What rate of return should I use?
For a high-yield savings account, use its current APY. For long-term stock investments, many planners model 6–8% per year before inflation, but past performance never guarantees future results.
Does the calculator account for taxes or inflation?
No. Results are pre-tax nominal values. To approximate inflation-adjusted growth, subtract an inflation estimate (e.g. 2–3%) from your rate of return.
Note: Results are estimates for
educational purposes only and may differ from actual figures quoted by
lenders or financial institutions. See our
disclaimer.
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