How to Use This Calculator
Enter your initial deposit, any monthly contributions, the expected annual return rate, time period, and how often interest compounds.
Formula
Compound Interest Formula:
A = P(1 + r/n)^(nt)
Where: P = principal, r = annual rate, n = compounds per year, t = years
For regular contributions, the future value of an annuity formula is added.
Examples
Example
$10,000 initial deposit with $500/month contributions at 7% for 20 years (monthly compounding):
Future Value: $281,326
Total Contributions: $130,000
Interest Earned: $151,326
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It is essentially "interest on interest," which causes wealth to grow exponentially over time.
How often should interest compound?
More frequent compounding (daily vs. annually) results in slightly more growth. However, the difference between monthly and daily compounding is minimal. Most savings accounts compound daily, while many investments compound annually or quarterly.