Compound Interest Calculator

Compound interest is the engine behind every long-term investing plan. Each year your money earns a return; the next year, that return earns its own return, and so on. Over decades, the curve gets steep.

The formula our calculator uses is the standard compound-growth equation. For a one-time deposit (the principal P) growing at annual rate r, compounded n times per year, for t years: future value = P * (1 + r/n)^(n*t). When you also add a monthly contribution C, we use the ordinary-annuity formula: future value of the contributions = C * [((1 + r/12)^(12*t) - 1) / (r/12)]. The total future value is the sum of those two terms.

Concrete example: $1,000 deposited at a 5% annual rate, compounded monthly, for ten years, grows to roughly $1,647 - even if you never add another penny. Add $200 a month and the same ten years would land near $32,500.

The single biggest lever in this formula is t (years). Doubling the time horizon far outweighs doubling the rate, because the exponent grows with t. This is why starting at 25 instead of 35 with the same monthly contribution can mean roughly double the retirement nest-egg.

Inflation is the silent counter-force. A 7% nominal return in a 3% inflation environment is a 4% real return. Cross-check any projection on this site against a "what if I lose 3% per year to inflation" sensitivity, and never assume past returns guarantee future ones.