About this calculator
Compound interest is often described as the most powerful force in personal finance, because it means your money earns returns not just on what you originally put in, but on all the interest it has already earned. This calculator projects how a starting balance plus regular monthly contributions grows over time at a given annual return, so you can see the real difference between starting to save now versus waiting a few years.
How it works
The tool compounds monthly: each month, interest is added to the current balance at 1/12th of your annual rate, and then your monthly contribution is added on top. Over many years this produces the classic exponential growth curve associated with compounding — the later years of a long-term investment typically grow the balance far more, in absolute terms, than the early years, simply because there's more accumulated principal generating interest.
Worked example
Starting with $5,000 and adding $200 a month at an expected 7% annual return for 20 years grows to roughly $124,379. You'll have contributed $53,000 of your own money ($5,000 starting balance plus 240 months of $200) — the remaining $71,379 is growth from compounding alone, which is more than your total contributions.
Formula cross-checked against: Investor.gov — Compound Interest Calculator.
Frequently asked questions
What return rate should I use?
There's no guaranteed rate for investments — many people use a long-run historical average for a diversified stock index (often cited in the 6-8% range before inflation) as a rough planning estimate, not a promise of future results.
Does this account for taxes or inflation?
No, this shows nominal growth only. Taxes on gains and the eroding effect of inflation will both reduce your real, spendable purchasing power below the number shown here.
Why does the balance grow faster in later years?
Because compounding applies to your entire balance, not just your original deposit — once your account has been growing for a decade or more, the interest on interest starts to outweigh your own contributions.
Last reviewed: September 2026.