Compound Interest Calculator with Monthly Contributions

How to use the compound interest calculator

1. Enter your Starting amount (use 0 if you are starting from nothing).
2. Enter a Regular contribution and how often you make it in Contribution frequency: monthly, every two weeks, weekly, quarterly, twice a year or yearly.
3. Choose whether contributions are made at the End of each period or the Start of each period.
4. Enter the Interest rate (per year) and the Compounding that applies, from yearly to daily or continuous.
5. Set the number of Years, and optionally Raise contributions each year by a percentage.
6. Read the final balance, total contributed and total interest, then follow the year-by-year table and chart. The table downloads as CSV.

What it does and when to use it

Compound growth is hard to picture. A balance creeps up for years, then seems to take off. This calculator shows that curve with real numbers, split into the money you put in and the interest it earned.

Use it to:

• Plan a savings goal, such as an emergency fund, a down payment or a car fund.
• See the value of starting early. Compare 20 years of saving with 10.
• Test a contribution habit. See what $200 a month adds up to, and what raising it each year does.
• Compare compounding frequencies for a savings account or CD.
• Explain compounding to a child, a student or yourself, with a table you can download.

How it works

The calculator moves forward one contribution period at a time.

Rate per period. It first turns the yearly rate r and compounding frequency n into a growth factor for each contribution period. With p contributions a year:

factor = (1 + r ÷ n)^(n ÷ p)

For continuous compounding, the factor is e^(r ÷ p). For example, 7% compounded monthly with monthly contributions gives a factor of 1 + 0.07 ÷ 12. The same 7% compounded yearly with monthly contributions gives 1.07^(1 ÷ 12) per month.

Each period. If you contribute at the start, the contribution is added first. Then interest = balance × (factor − 1) is added. If you contribute at the end, the contribution is added after the interest.

Step-ups. If you choose a yearly raise, every contribution in year 2 is that much higher than in year 1, and so on.

Results. Total contributed includes your starting amount. Total interest is everything else. The effective annual rate is (1 + r ÷ n)^n − 1. It is the same idea as the APY that US banks disclose for savings accounts under Regulation DD.

This method lets a deposit start compounding from the day it is made. When you contribute more often than interest compounds (say, monthly deposits with yearly compounding), a real bank may pay simple interest on part-period deposits, so its figure could be slightly lower.

Worked examples

All results below come from this calculator.

1. A single deposit. $10,000 at 5% compounded yearly for 10 years grows to $16,288.95, which is 10,000 × 1.05^10. Interest is $6,288.95. With monthly compounding, the same deposit reaches $16,470.09.

2. Saving $100 a month from zero. At 6% compounded monthly, deposits at the end of each month for 10 years reach $16,387.93. You put in $12,000.00, so $4,387.93 is interest. This matches the annuity formula: 100 × ((1.005^120 − 1) ÷ 0.005). Paying at the start of each month instead gives $16,469.87.

3. A starting amount plus contributions. $10,000 plus $200 a month at 7% compounded monthly for 10 years ends at $54,713.58. You contribute $34,000.00, and interest adds $20,713.58, which is 37.9% of the final balance. In the first year interest is $801.42. In the tenth year it is $3,600.02.

4. Twenty years, with and without a raise. Keep the same plan for 20 years and the balance is $144,572.72, from $58,000.00 of contributions. Now raise the monthly contribution by 3% each year. The final balance becomes $171,236.17, from $74,488.90 of contributions. Interest is now more than half of the balance. Doubling the time more than doubles the interest, because later years compound on a much larger balance.

Why time matters most

Look at example 3 and example 4 side by side. The first 10 years earn $20,713.58 of interest. Ten more years of the same plan take total interest to $86,572.72. The plan did not change. Only the time did. This is the main lesson of compounding: the years at the end do the heavy lifting, but only if the early years happen.

Limits and tips

• The rate is fixed. Savings rates change and investment returns vary from year to year, including losses. The result is an illustration, not a forecast.
• No taxes, fees or inflation. Account fees, fund charges and taxes reduce growth. The inflation calculator shows what a future amount is worth in today’s money.
• Whole years. The number of years is rounded to a whole number.
• Contributions are regular. For irregular deposits, run the calculator for each lump sum or use the starting amount.

Related calculators

• Check the yield of a savings account or CD with the APY calculator.
• Work backwards from a target with the savings goal calculator, or get a quick doubling time from the rule of 72 calculator.
• Grow a single amount in any currency with the future value calculator.
• Compare saving with paying down debt. The credit card interest calculator shows how fast compounding works against you on a card balance.