Compound interest calculator
Project investment growth with a starting balance, nominal annual rate, compounding frequency, recurring contributions and inflation.
Compound interest formula
Without recurring contributions, compound growth is calculated as:
A = P(1 + r/n)nt
P is the initial principal, r is the nominal annual rate as a decimal, n is the number of compounding periods per year and t is time in years. For continuous compounding, the formula is A = Pert.
When recurring deposits are included, this calculator processes each monthly period using the equivalent monthly rate implied by the selected compounding convention. Monthly or annual contributions are added at the beginning or end of their selected period. This keeps the projection consistent when the deposit frequency differs from the compounding frequency.
Nominal rate versus effective annual rate
The entered rate is a nominal annual rate. More frequent compounding produces a different effective annual rate (EAR). For example, a nominal 6% rate compounded monthly has an EAR slightly above 6%. The calculator displays the resulting EAR so alternatives can be compared on the same annual basis.
Example
With a $10,000 initial investment, a 7% nominal annual rate compounded monthly, $250 deposited at the end of every month and a 20-year horizon, the projected ending balance is about $170,619. Total deposits are $70,000, while the remaining growth is compound interest. The inflation-adjusted result expresses that future balance in today’s purchasing-power terms using the inflation assumption entered.
How contribution timing changes the result
An end-of-period contribution begins earning interest in the next period. A beginning-of-period contribution earns for one additional period. The difference may look small in one month, but it can accumulate over a long horizon. Actual accounts can credit interest on different schedules, so use the calculator as a projection rather than a statement or guaranteed return.
What this calculator does not assume
- It does not predict market returns or guarantee a future balance.
- It assumes the entered rate and contribution stay constant.
- It does not deduct taxes, account fees, trading costs or withdrawals.
- Inflation affects only the displayed real value; it does not change the nominal account balance.
- Negative rates are supported above −100%, but the model does not allow the balance to cross below zero.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus previously credited interest.
Does daily compounding always produce more growth?
At the same positive nominal rate, more frequent compounding produces a slightly higher effective rate. The difference narrows as frequency increases.
Are monthly contributions included in the compound interest formula?
Yes. The calculator simulates each monthly period, adds the selected contribution at its chosen timing and records contributions separately from interest earned.
Can I use this as an investment calculator?
Yes, for fixed-rate growth scenarios. Variable market returns, taxes and fees require assumptions beyond a standard compound interest calculation, so the result is not investment advice.
Related calculators
Long-term planning: Compare savings with an income goal using the Retirement Calculator.
Measure investment performance: Compare total proceeds with all invested costs using the ROI Calculator.
Related: For debt payoff instead of investment growth, use the Credit Card Payoff Calculator.