Compound interest
calculator.
See how a starting amount and regular contributions grow with compound interest, compounded yearly to daily or continuously, with yearly contribution increases, the contribution needed to reach a goal, APY, a year-by-year table and the result in today’s money.
Interest on
interest.
- Lump sum: A = P × (1 + r/k)^(k × t) for k compounding periods a year, or P × e^(r × t) when continuous.
- Contributions grow from the date they are added; contributions at the start of a period earn one period more than at the end.
- APY = (1 + r/k)^k − 1.
- In today’s money = final balance ÷ (1 + inflation)^years.
How does compound interest work?
Compound interest is interest earned on earlier interest as well as on the money you put in. $10,000 at 5% compounded yearly becomes $10,500 after one year and $16,288.95 after ten, because each year’s 5% applies to a larger balance.
Why contributions matter more than the starting amount
Regular saving adds money that then compounds. $10,000 plus $200 a month at 6% for 20 years grows to about $125,500, of which $58,000 is your own money and about $67,500 is growth.
How much do I need to save each month?
Enter a savings goal and the calculator solves for the regular contribution that reaches it exactly. With $10,000 already saved, 6% compounded monthly and 20 years, reaching $200,000 takes $361.22 a month. If you raise contributions each year, say by 3% to keep pace with pay, the same $200 a month grows to about $150,200 instead of $125,500.
How often interest compounds
More frequent compounding raises the effective yield slightly. 12% compounded monthly is an APY of 12.683%, so $1,000 grows to $1,126.83 in a year rather than $1,120. Beyond daily compounding the difference is negligible.
Adjusting for inflation
A balance decades from now buys less than the same number of dollars today. At 3% inflation, $609,985 after 30 years has the buying power of about $251,300 today.
Worked examples.
A lump sum for 10 years
$10,000 at 5% compounded yearly, no contributions.
$16,288.95: $10,000 × 1.05¹⁰.
Load this exampleSaving $200 a month
$10,000 to start plus $200 a month at 6% compounded monthly for 20 years.
$125,510.22, of which $58,000.00 is contributions and $67,510.22 is growth.
Load this exampleMonthly vs yearly compounding
$1,000 at 12% for one year, compounded monthly.
$1,126.83 (APY 12.683%), versus $1,120.00 compounded yearly.
Load this exampleAdjusted for inflation
$500 a month for 30 years at 7%, compounded monthly, with 3% inflation.
$609,985.50, worth about $251,305.95 in today’s money.
Load this exampleWhat this calculator
does not do.
- Assumes a constant interest rate; real investment returns vary and can be negative.
- Taxes, fees and withdrawals are not included.
- Contributions are monthly or yearly; other schedules are not modelled.
Common questions.
What is the rule of 72?
A shortcut: divide 72 by the annual rate to estimate the years needed to double. At 6% that is about 12 years; the exact figure with yearly compounding is 11.9 years.
What is the difference between APR and APY?
APR is the stated yearly rate; APY includes the effect of compounding within the year, so it is higher whenever interest compounds more than once a year.
Does daily compounding make a big difference?
Only slightly. At 5%, monthly compounding gives an APY of 5.116% and daily 5.127%.
How much should I save each month to reach a goal?
Enter the goal in the optional field. The required monthly amount depends on what you already have, the rate and the time: $200,000 in 20 years at 6% with $10,000 saved needs $361.22 a month.
- Investor.gov (SEC), Compound interest — definition
- Investor.gov (SEC), Compound Interest Calculator — reference calculator
Month-by-month simulation checked against closed forms for lump sums (yearly, quarterly, continuous), monthly and yearly annuities with end- and start-of-period contributions, APY and inflation adjustment. The goal solver and the growth split use the linearity of the balance in the contribution and are tested to round-trip exactly; yearly increases are checked against a closed form.