Enter principal, annual rate, years, compounding frequency, and optional monthly contribution to see growth.
With compound interest, each period's interest is added to the principal and earns interest in the next period. This snowball effect means even modest rates produce significant growth over long horizons. Adding regular monthly contributions accelerates growth further.
To calculate compound interest, raise (1 + annual rate divided by the number of compounds per year) to the power of (compounds per year times years), then multiply by the principal. Example: 10,000 invested at 7% annual interest, compounded monthly for 10 years, grows to 20,096.61.
| Principal | Rate | Years | Frequency | Final balance |
|---|---|---|---|---|
| 10,000 | 7% | 10 | Annually | 19,671.51 |
| 10,000 | 7% | 10 | Monthly | 20,096.61 |
| 10,000 | 7% | 10 | Daily | 20,136.18 |
| 10,000 | 7% | 20 | Monthly | 40,387.39 |
| 10,000 | 7% | 10 | Monthly + 200/mo | 54,713.58 |
More frequent compounding earns slightly more, because interest is added to the principal more often and starts earning its own interest sooner. In the table above, 10,000 at 7% for 10 years grows to 19,671.51 compounded annually but 20,096.61 compounded monthly, a difference of 425.10.
The difference is small once compounding is already monthly. Daily compounding at the same rate and term yields 20,136.18 versus 20,096.61 for monthly, a gain of only 39.57 on a 10,000 principal over 10 years.
Adding a fixed monthly deposit grows the balance much faster than the principal alone, because each new deposit also compounds for its remaining time in the account. Adding 200 per month to the 10,000 example above raises the 10-year balance from 20,096.61 to 54,713.58.
Each period's interest is added to the principal and itself earns interest afterward, so growth accelerates rather than staying linear. Doubling the term from 10 to 20 years in the table above more than doubles the final balance, from 20,096.61 to 40,387.39.
This calculator assumes a constant rate, fixed compounding frequency, and contributions made at regular intervals with no fees or taxes deducted. Real investment returns vary over time, so treat the result as an estimate and consult a financial advisor for investment decisions.