Savings & Investing

Compound Interest Calculator

Enter your starting balance, monthly contribution, annual interest rate, and time horizon. The calculator compounds interest monthly and credits each contribution at the end of the month, giving you a final balance, a breakdown of principal versus earned interest, and a year-by-year table so you can see the snowball effect in motion.

Final Balance

$144,572.72

Total contributed

$58,000.00

Interest earned

$86,572.72

Growth over time

ContributedBalance
Year-by-year breakdown
YearBalanceContributedInterest
1$13,201.42$12,400.00$801.42
2$16,634.27$14,800.00$1,834.27
3$20,315.28$17,200.00$3,115.28
4$24,262.39$19,600.00$4,662.39
5$28,494.83$22,000.00$6,494.83
6$33,033.24$24,400.00$8,633.24
7$37,899.74$26,800.00$11,099.74
8$43,118.03$29,200.00$13,918.03
9$48,713.55$31,600.00$17,113.55
10$54,713.58$34,000.00$20,713.58
11$61,147.34$36,400.00$24,747.34
12$68,046.20$38,800.00$29,246.20
13$75,443.79$41,200.00$34,243.79
14$83,376.14$43,600.00$39,776.14
15$91,881.93$46,000.00$45,881.93
16$101,002.60$48,400.00$52,602.60
17$110,782.60$50,800.00$59,982.60
18$121,269.60$53,200.00$68,069.60
19$132,514.70$55,600.00$76,914.70
20$144,572.72$58,000.00$86,572.72

Compare scenarios

Run the same calculation with two or three input sets side by side. Differences are highlighted; every number comes from the same tested formula as the calculator above.

InputScenario AScenario B
Initial Principal
Monthly Contribution
Annual Rate Pct
Years

How it works

Each month your balance is multiplied by (1 + annual rate ÷ 12), which converts the annual percentage rate into a monthly growth factor. Your monthly contribution is then added at the end of that same month. Because the rate compounds on a growing base every single month — not just once a year — the effective annual return is slightly higher than the stated rate, and the gap widens the longer your money is invested.

Contributions are credited at the end of each month. This is the standard assumption for regular savings deposits and means the first contribution earns interest for 11 months in the first year, the second for 10 months, and so on. If you contribute at the start of each month instead, your actual balance would be very slightly higher than shown here — but end-of-month timing is the conservative and more commonly modelled assumption.

Starting early nearly always beats contributing more. A dollar invested today earns interest for the full horizon; a dollar added in year 10 earns interest for a much shorter window. The year-by-year table makes this visible: interest earned in early years appears small in absolute terms, but each of those dollars then compounds continuously. Delaying even five years can cost more in final balance than many years of larger contributions can recover.

Methodology

How this number is produced: the exact formula identity, the assumptions it makes, its limitations, and the numeric profile used for rounding.

Formula
src/tools/compound-interest/calc.ts#calcCompoundInterestv1.0.0
Rounding profile
vcc-decimal-v1
Effective period
Formula version 1.0.0 — current
Last reviewed
2026-07-11
Assumptions
  • Interest compounds monthly: each month the balance is multiplied by (1 + annual rate ÷ 12).
  • The monthly contribution is credited at the end of each month (the conservative, commonly modelled timing); start-of-month deposits would grow very slightly faster.
  • The annual rate is constant for the whole horizon; the number of months is years × 12, rounded to the nearest whole month.
Limitations
  • Shows nominal, pre-tax growth only — no adjustment for inflation or taxes; subtract your expected inflation rate from the input rate to approximate real returns.
  • A single fixed rate cannot capture market volatility or sequence-of-returns risk; model several scenarios rather than anchoring on one figure.
  • Educational projection, not financial advice; past performance is no guarantee of future results.

Frequently asked questions

What annual return should I assume?+

Long-run historical averages for broad stock market indices are often cited in the 7–10% nominal range (roughly 4–7% after adjusting for inflation), but past performance offers no guarantee of future results. Returns vary significantly by asset class, country, time period, and fees. For conservative planning many advisors suggest using 4–6%; for stress-testing a plan, 3% or lower. No single figure is correct — consider modelling several scenarios rather than anchoring on one number.

How is this different from simple interest?+

Simple interest is calculated only on the original principal: $10,000 at 10% simple interest always earns $1,000 per year, regardless of how many years have passed. Compound interest is calculated on the current balance, which grows each period. After 20 years at 10%, simple interest yields $30,000 total while monthly compounding yields roughly $73,280 — the $43,000 difference is entirely the result of earning interest on previous interest.

Does this account for inflation or taxes?+

No — this calculator shows nominal, pre-tax growth only. Inflation erodes purchasing power over time; to estimate real returns, subtract your expected inflation rate from the annual rate you enter (e.g. enter 5% instead of 8% if you expect 3% inflation). Taxes on interest and investment gains also reduce effective returns and vary widely by account type (taxable, ISA, 401k, TFSA) and jurisdiction. For accurate after-tax projections, consult a qualified financial adviser.

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