Compound Interest Calculator
Calculate how your money grows with compound interest. See the power of starting early with any initial amount and regular contributions.
$10,000 invested at 7% with $200 added monthly grows to about $144,573 over 20 years — of which $86,573 is compound interest and $58,000 is money contributed.
Calculator
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How This Calculator Works
The compound interest calculator uses the formula:
A = P × (1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) - 1] / (r/n)
Where P is the principal, r is the annual rate, n is compounds per year, t is years, and PMT is the monthly contribution.
What Your Result Means
The result shows your total balance after the investment period. The "total contributed" is what you actually put in, and the difference is the compound interest you earned.
The key insight: the earlier you start, the more dramatic the growth. An investor who starts at 25 with $200/month will typically have more at 65 than someone who starts at 35 with $400/month.
Worked example
Using the defaults — $10,000 initial, 7% annual return, 20 years, $200 added monthly:
With monthly compounding, r/n = 7% ÷ 12 = 0.005833 and nt = 240.
Grow the initial sum. $10,000 × (1.005833)^240 = $40,387. The original $10,000 earns $30,387 on its own, doing nothing.
Grow the contributions. The annuity factor is ((1.005833)^240 − 1) ÷ 0.005833 = 520.93. Multiply by $200: $104,185. You paid in $48,000, so those contributions earned $56,185.
Add them. $40,387 + $104,185 = $144,573. Total contributed is $10,000 + $48,000 = $58,000, so the interest earned is $86,573 — 60% of the final balance.
See what more time does. Extend the same plan to 30 years and the balance is $325,159; to 40 years it is $688,077. Ten more years in the middle of the schedule adds more than the first ten years combined, because by then a large balance is compounding.
Enter 10000, 7, 20 and 200 above to reproduce the $144,573 figure. The model compounds monthly and credits each contribution at the end of the month, which is the conservative convention.
Contributions versus compounding over time
The same $10,000 start and $200 monthly contribution at 7%. Watch the balance shift from being mostly your money to being mostly growth.
| Horizon | Total contributed | Interest earned | Final balance | Interest share |
|---|---|---|---|---|
| 5 years | $22,000 | $6,495 | $28,495 | 23% |
| 10 years | $34,000 | $20,714 | $54,714 | 38% |
| 20 years (default) | $58,000 | $86,573 | $144,573 | 60% |
| 30 years | $82,000 | $243,159 | $325,159 | 75% |
| 40 years | $106,000 | $582,077 | $688,077 | 85% |
Interest overtakes contributions in dollar terms at roughly year 16. By year 40, 85% of the balance is growth, which is why the horizon matters far more than the rate for most savers.
Common mistakes with this calculation
- Assuming the 7% return arrives every year. A 7% average is made of years at +25% and years at −18%. Compounding a smooth 7% gives a different result than the same returns in a volatile sequence, because losses apply to a larger balance. This calculator shows the smooth path, which is a planning convenience, not a forecast.
- Comparing nominal returns to real spending. At 3% inflation, $144,573 in twenty years buys what about $80,000 buys today. A nominal projection compared against today's prices overstates the outcome substantially. Model in real terms, or model inflation explicitly.
- Ignoring fees, which compound just as reliably. A 1% annual fund fee on a 7% gross return reduces the 20-year outcome by roughly 20%. Fees are deducted every year whether the fund rises or falls, so they compound against you exactly as returns compound for you. Use low-cost index funds where you can.
- Starting late and trying to compensate with a higher contribution. Starting at 25 with $200 a month for 40 years produces $688,077. Starting at 35 with $400 a month for 30 years produces a comparable but still smaller balance, at double the monthly cost. Time is the input you cannot buy back later at any price.
When this calculator does not apply
- It assumes a constant annual return, which no market delivers. Real returns arrive in a volatile sequence.
- It compounds monthly with contributions credited at month end, which slightly understates the outcome compared with month-start contributions.
- It ignores taxes. Interest and gains in a taxable account are taxed annually or on realisation, which reduces the compounding base.
- It excludes fund expense ratios, trading costs and advisory fees.
- It ignores inflation, so all figures are nominal.
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both your original investment and on the interest that investment has already earned. It creates exponential growth over time.
How often is interest compounded?
This calculator compounds monthly (12 times per year), which is standard for most investment accounts.
Is 7% annual return realistic?
The S&P 500 has averaged approximately 10% annually before inflation over the long term. A 7% return is conservative and accounts for inflation. Your actual returns will vary.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full formula derivation.
- Compound Interest Calculator US Securities and Exchange Commission
- Mutual Fund and ETF Fees and Expenses US Securities and Exchange Commission
- Compound Interest — Investor Glossary US Securities and Exchange Commission
- Consumer Price Index US Bureau of Labor Statistics
- Financial Accounts of the United States Federal Reserve
Last reviewed .
Key takeaways
- $10,000 at 7% with $200 a month reaches about $144,573 in 20 years.
- Of that, $86,573 is compound interest and $58,000 is money contributed — 60% growth.
- Interest overtakes contributions in dollar terms at roughly year 16.
- Extending the plan from 20 to 40 years multiplies the balance 4.8 times while less than doubling the contributions.
- Fees compound against you at the same rate returns compound for you.