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Compound Interest Calculator

The compound interest formula A = P(1 + r/n)^(nt) calculates how an investment grows when interest earns interest over time. Enter your principal, rate, compounding frequency, and optional contributions to see estimated growth projections.

Quick Answer

A $10,000 investment at 7% annual interest compounded monthly grows to an estimated $20,097 after 10 years. With an additional $200 monthly contribution, the estimated total reaches $54,892.

Common Examples

Input Result
$10,000 at 7% for 10 years (monthly) Estimated $20,097
$5,000 at 5% for 20 years (annually) Estimated $13,266
$1,000 at 8% for 30 years (quarterly) Estimated $10,765
$10,000 at 6% for 5 years + $500/month Estimated $48,371

How It Works

This calculator uses the compound interest formula:

A = P(1 + r/n)^(nt)

Where:

  • A = estimated future value
  • P = principal (initial investment)
  • r = annual interest rate (decimal)
  • n = number of times interest compounds per year
  • t = time in years

For regular contributions, the future value of a series formula is applied separately and added to the principal growth.

Worked Example

For a $10,000 investment at 7% compounded monthly for 10 years: r/n = 0.07/12 = 0.005833, and nt = 120. A = 10000 x (1.005833)^120 = 10000 x 2.0097 ≈ $20,097. The investment roughly doubles, with $10,097 coming from compound interest alone.

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Frequently Asked Questions

What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This means your investment may grow at an increasing rate over time, as each period's interest is added to the balance before calculating the next period's interest.
How does compounding frequency affect returns?
More frequent compounding (e.g., monthly vs. annually) results in slightly higher estimated returns because interest is calculated and added to the balance more often. However, the difference between monthly and daily compounding is typically small.
What rate of return should I use?
The rate depends on your investment. Historical S&P 500 average annual return has been approximately 10% before inflation (roughly 7% after inflation), but past performance does not guarantee future results. Conservative estimates for diversified portfolios often range from 5% to 8%.
Does this account for taxes or fees?
No. This calculator estimates gross returns only. Actual returns will be reduced by investment fees, taxes on gains, and inflation. For a more complete picture, consult a financial advisor.

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