What Is a Compound Interest Calculator?

This compound interest calculator shows how your investments grow over time, accounting for both your initial lump-sum investment and regular monthly contributions. It uses the power of compound interest — earning returns on your returns — to project your portfolio’s future value.

How to Use This Calculator

Enter your initial investment (starting balance).
Enter your planned monthly contribution.
Enter your expected annual return (e.g., 8% for a diversified stock portfolio).
Set the investment period in years.
Choose your compounding frequency (monthly is most common).
Click Calculate Growth to see your future value and interest earned.

The Power of Compound Interest

When your returns generate their own returns, wealth grows exponentially. $500/month invested for 30 years at 8% annual return grows to over $750,000 — from just $180,000 in total contributions. Time in the market is your greatest asset.

How Is Investment Growth Calculated?

FV = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) − 1] / (r/n)

Variable Definitions

Future value of the investment

Initial principal (lump-sum investment)

Annual interest rate (as a decimal)

Number of times interest compounds per year

Time in years

PMT

Regular monthly contribution

💡 This formula combines the compound interest formula with the future value of an annuity formula to account for ongoing contributions.

Frequently Asked Questions — Investment Calculator

What is a realistic expected rate of return?

Historical average annual returns have been approximately: S&P 500 index funds: ~10% before inflation; Diversified stock portfolio: 7%–9%; Balanced stock/bond portfolio: 5%–7%; Bonds: 3%–5%; High-yield savings: 4%–5% (current rates). We recommend using conservative estimates (6%–8%) for long-term projections.

How does compounding frequency affect my returns?

The more frequently interest compounds, the faster your money grows. Daily compounding yields slightly more than monthly, which yields more than annual. For most investment accounts, the difference between monthly and daily compounding is small. The biggest factor in long-term wealth is consistent contributions and a long time horizon.

When should I start investing?

The best time to start investing is as early as possible. Thanks to compound interest, money invested in your 20s has 40+ years to grow. Waiting just 10 years to start can result in dramatically less wealth at retirement, even if you invest the same total amount. Start with what you can afford and increase contributions over time.

Compound Interest Calculator