Compound Interest Calculator

This calculator projects how an investment grows by combining five inputs. Your starting amount is the lump sum you begin with, and your regular contribution is the amount you add each week, fortnight, month or year.

The annual interest rate is your expected average return, the investment period is how many years you stay invested, and the compounding frequency determines how often interest is added to your balance. The calculator applies interest and your contributions across every compounding period to estimate your future value, total contributions and the interest earned.

Compound interest is interest earned on both your original money and on the interest you have already accumulated. In plain English, you earn interest on your interest. Each time interest is added, your balance grows, and the next interest calculation is based on that larger amount.

This creates a snowball effect that accelerates over time. In the early years growth can feel slow, but as the balance builds the yearly interest can eventually outweigh your contributions, which is why time in the market is so valuable.

Regular contributions are one of the most powerful ways to build wealth. Every deposit you make adds to your principal and then earns compound interest for the rest of your investment period, so earlier contributions have more time to grow.

Even modest, consistent deposits can significantly outperform a larger one-off investment made later. Automating your contributions removes the temptation to skip them and helps your balance compound steadily through all market conditions.

Consider an investor with the following figures:

• Starting amount: $10,000
• Monthly contribution: $500
• Annual return: 7%
• Investment period: 20 years

With monthly compounding, the $10,000 starting balance and $500 monthly deposits grow to roughly $300,000 after 20 years. Of that, about $130,000 comes from contributions ($10,000 plus $500 a month for 240 months) and the remaining balance is interest earned through compounding. The exact figure depends on the compounding frequency you choose, which is why it helps to try different scenarios above.

Simple interest is calculated only on your original principal. If you invest $10,000 at 7% simple interest, you earn $700 every year regardless of how the balance grows, so it increases in a straight line.

Compound interest is calculated on your principal plus all previously earned interest, so the amount you earn grows each period. Over long periods compound interest produces a much larger balance than simple interest, which is why it matters so much for long-term saving and investing.

• Start earlier so your money has more time to compound.
• Contribute regularly to steadily build your principal.
• Reinvest your earnings instead of withdrawing them, so they keep compounding.
• Reduce fees where you can, since high fees quietly eat into long-term returns.
• Increase your contribution amount over time, for example whenever your income rises.
• Allow more time for compounding by staying invested through market ups and downs.