Compound Interest Calculator
Project savings or investments year by year, separating what you contribute from what compounding adds.
Year-by-year projection
| Year | Opening balance | Contributions | Growth | Closing balance |
|---|---|---|---|---|
| 1 | $10,000.00 | $6,000.00 | $919.19 | $16,919.19 |
| 2 | $16,919.19 | $6,000.00 | $1,419.38 | $24,338.58 |
| 3 | $24,338.58 | $6,000.00 | $1,955.73 | $32,294.31 |
| 4 | $32,294.31 | $6,000.00 | $2,530.85 | $40,825.16 |
| 5 | $40,825.16 | $6,000.00 | $3,147.55 | $49,972.70 |
| 6 | $49,972.70 | $6,000.00 | $3,808.82 | $59,781.53 |
| 7 | $59,781.53 | $6,000.00 | $4,517.90 | $70,299.43 |
| 8 | $70,299.43 | $6,000.00 | $5,278.24 | $81,577.68 |
| 9 | $81,577.68 | $6,000.00 | $6,093.55 | $93,671.22 |
| 10 | $93,671.22 | $6,000.00 | $6,967.79 | $106,639.02 |
Watch the growth column against the contributions column. The year growth overtakes contributions is the point compounding starts doing the work.
How this is calculated
Each compounding period, interest is added to the balance and the next contribution is applied, so subsequent interest is charged on a larger balance. Optionally deflated by inflation to show the result in today’s money.
Compound interest is interest earned on interest already earned. Each period, the return is calculated on a balance that includes every previous return, so the amount added grows even when the rate stays the same.
The formula for a lump sum is A = P(1 + r/n)^(nt), where P is the starting amount, r the annual rate, n the number of compounding periods per year, and t the number of years. Adding regular contributions turns it into a series, which is what the year-by-year table above computes directly.
The single most useful thing in that table is not the final number. It is the year when the growth column overtakes the contributions column. Before that point, your balance is mostly money you put in. After it, the account is growing faster than you are funding it, and every further year widens the gap. Over a long horizon the majority of the final balance is typically growth, not contributions — but that crossover often does not arrive for a decade or more, which is why compounding feels disappointing early and unstoppable late.
Three things distort long projections and are worth handling deliberately.
Time dominates rate. Because the exponent is years, an extra five years at the start usually beats an extra percentage point of return. Starting earlier is the highest-leverage variable available to you, and the only one you cannot recover later.
Inflation is not optional. A projection running thirty years into the future in nominal dollars overstates what the money will buy. Setting the inflation field converts the result to today's purchasing power, which is the figure worth planning against.
Fees compound too, in the wrong direction. A 1% annual fee does not cost 1% of the final balance; it compounds against you every year and can consume a large share of lifetime growth.
Worked examples
Steady long-term investing
$10,000 to start, $500 a month, 7% a year for 25 years.
You contribute $160,000 and finish with well over $450,000. Growth is roughly two thirds of the final balance — but check the table: it does not overtake contributions until around year twelve.
Load this scenario into the calculatorThe cost of a ten-year delay
The same contributions and return, but only 15 years instead of 25.
Ten fewer years costs far more than ten years of contributions. The missing decade is the one where the earlier money would have been compounding hardest.
Load this scenario into the calculatorThe same projection in today's money
The 25-year plan again, with 3% inflation applied.
The nominal figure is unchanged, but its purchasing power is roughly half. This is the number to plan retirement against, not the headline one.
Load this scenario into the calculatorWhat this assumes
- The return is constant every year. Real markets do not behave this way — the same average return with volatility produces a different, usually lower, result.
- Contributions are made every month without interruption and are spread evenly across the compounding periods.
- No taxes are deducted. In a taxable account, tax on dividends and gains reduces the effective return significantly.
- No account, platform, or fund fees are applied. Subtract your total expense ratio from the return rate to approximate them.
- The inflation adjustment applies a constant rate and is for illustration only.
Common questions
- What is a realistic rate of return to use?
- For a diversified stock portfolio, long-run historical averages are around 10% nominal and 7% after inflation, with severe variation over any given decade. For cash savings, use the rate your account actually pays. Being conservative costs nothing; being optimistic in a 30-year projection compounds a guess into a very large error.
- Does compounding frequency make much difference?
- Less than people expect. Moving from annual to monthly compounding at 7% adds roughly a fifth of a percentage point to the effective annual rate. Daily versus monthly is nearly indistinguishable. The rate and the time horizon matter far more.
- When does growth overtake my contributions?
- Look for the year in the table where the growth column exceeds the contributions column. At 7% with steady monthly contributions it typically falls somewhere between years ten and fifteen. Before it, you are doing the work; after it, the balance is.
- How do fees affect this?
- More than the number suggests, because they compound too. A 1% annual fee on a 7% return leaves 6%, and over 30 years that gap can consume a quarter or more of the growth. Subtract your total expense ratio from the return rate to see the effect here.
- Should I use the nominal or the inflation-adjusted figure?
- The inflation-adjusted one, for any decision about what the money will buy. Nominal figures over long horizons look impressive and mislead — $1,000,000 in thirty years buys roughly what $400,000 buys today at 3% inflation.
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