Finance

Compound Interest Calculator

Initial amount

Monthly contribution

Annual interest rate

Years

Compounding

Future value

$144,572.72

Starting principal: $10,000.00
Total contributions: $48,000.00
Total interest earned: $86,572.72

Balance over Year

PrincipalContributionsInterest

See how an investment grows over time with compounding and optional monthly contributions — including total interest earned.

By Maya R. · Reviewed by David K., CFA · Updated 2026-06-03

This is an educational estimate, not financial advice. Figures exclude taxes, fees, and individual circumstances. Verify with a licensed professional before making money decisions.

Quick answer

Compound interest is found with A = P(1 + r/n)^(nt), where interest is added to the balance each period and then earns further interest. Adding regular contributions increases growth because each deposit also compounds over the remaining time.

How to use this calculator

Enter how much you're starting with (the initial principal).
Add a monthly contribution if you plan to keep investing — leave it at 0 for a lump sum only.
Set the annual interest rate and how often interest compounds (monthly is most common for savings).
Read the future value and the share that came from interest rather than your own deposits.

Formula

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

A — final amount (future value)
P — initial principal
r — annual interest rate (decimal)
n — compounding periods per year
t — number of years
PMT — contribution per period

Worked example

Invest $10,000 at 7% compounded monthly, adding $200 every month for 20 years. Your deposits total $58,000, but the balance grows to about $145,900 — roughly $87,900 of that is interest earned on interest.

Frequently asked questions

What is compound interest?

Compound interest is interest calculated on both your original principal and the interest already added. Because each period's interest earns interest in future periods, balances grow faster the longer you stay invested.

How does compounding frequency change the result?

More frequent compounding (daily vs. annually) produces slightly more growth because interest is added — and starts earning — sooner. The difference is small at low rates but widens over long horizons.

Does this account for monthly contributions?

Yes. Add a monthly contribution and the calculator compounds each deposit from the month it's made, then separates how much of the final balance is your contributions versus earned interest.

Is compound interest taxed?

In a regular taxable account, interest and gains are generally taxable in the year they’re earned. Tax-advantaged accounts (like an IRA or 401(k)) can defer or exempt that tax. This tool shows pre-tax growth only.

What's the difference between APR and APY?

APR is the simple annual rate before compounding; APY (annual percentage yield) reflects the effect of compounding. For the same nominal rate, APY is always equal to or higher than APR.

How accurate is this calculator?

It uses the standard compound interest formula with a fixed rate. Real investments have variable returns, fees, and taxes, so treat the result as an illustration of how compounding works, not a guaranteed forecast.

Related calculators

Maya R. · Author

Reviewed by David K., CFA · Updated 2026-06-03

Sources

U.S. SEC — Investor.gov Compound Interest Calculator — Reference methodology for compound growth.
Consumer Financial Protection Bureau — Compound interest — Definitions of interest and APY.

Methodology · Report an error

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View answer.json (AI feed)

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  "question": "How is compound interest calculated?",
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  "formula": "A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)]",
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