Compound interest with monthly contributions
See how your savings grow with compounding interest and regular contributions.
This projects how a balance grows with compound interest, optionally with regular contributions, entirely in your browser. Compound interest means returns are earned on previous returns as well as on the original amount, which is why the growth curve bends upward rather than running straight — and why the length of time invested matters more than almost any other variable. The formula is A = P(1 + r/n)^(nt), with n the number of compounding periods each year. $10,000 at 7 percent compounded monthly becomes about $19,672 in ten years and $38,697 in twenty — the second decade adds roughly twice what the first did, from the same deposit. A useful shortcut is the rule of 72: divide 72 by the rate to approximate the doubling time, so 7 percent doubles in about ten years. Projections assume a constant rate and ignore inflation, tax and fees, none of which behave constantly in practice.
About the Compound Interest Calculator
Find out how powerful compounding really is. Enter your starting principal, annual interest rate, time horizon, compounding frequency, and any monthly contribution to see your projected final balance, your total contributions, and the interest earned. Great for planning savings, investments, and retirement goals.
How to use the Compound Interest Calculator
- 01Enter your starting principal (your initial deposit).
- 02Type the expected annual interest rate.
- 03Choose how many years you'll let the money grow.
- 04Pick a compounding frequency and (optionally) a monthly contribution.
Why use our Compound Interest Calculator
- 01
Flexible compounding
Annually, quarterly, monthly, or daily — modeled with the standard A = P(1 + r/n)^(nt) formula.
- 02
Monthly contributions
Adds the future value of a recurring monthly deposit to your final balance.
- 03
Clear breakdown
See exactly how much is contributions versus interest earned.
- 04
Private by design
Your numbers are calculated locally and never uploaded.
How does compound interest actually work?
The base calculation 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. Because t sits in the exponent, its effect is multiplicative rather than additive, and that produces the result people find hardest to believe: £10,000 at 7 percent becomes about £19,700 after ten years, £38,700 after twenty and £76,100 after thirty. The second decade adds roughly twice what the first did, and the third adds more than the first two combined — from the same starting sum with nothing added. This is the entire argument for starting early, and it is stronger than the argument for contributing more. Someone investing £200 a month for ten years and then stopping frequently ends up ahead of someone who starts ten years later and contributes for twenty, because the earlier money has more time to compound.
Compounding frequency and the rate that actually matters
How often interest is added changes the outcome, though less dramatically than people expect. £10,000 at 5 percent for one year yields £500 compounded annually, £506.25 quarterly, £511.62 monthly and £512.67 daily. The gap between annual and monthly is real but modest; the gap between monthly and daily is almost negligible, because the series converges toward a continuous-compounding limit. The genuinely important distinction is between the nominal rate and the effective annual rate, sometimes called AER or APY. A nominal 5 percent compounded monthly has an effective rate of 5.12 percent, and comparing a monthly-compounded product against an annually-compounded one on nominal rate alone is not a fair comparison. Where a provider quotes an effective annual rate, that figure already accounts for compounding frequency and can be compared directly.
Inflation, tax and fees — the three things that erode the projection
A projection at a nominal rate overstates what the money will actually be worth, in three separate ways. Inflation reduces purchasing power: at 2.5 percent inflation, a 7 percent nominal return is about 4.4 percent in real terms, and over thirty years the difference between projecting at nominal and real rates is enormous. Tax applies to returns in most jurisdictions unless the money is in a shelter such as an ISA, 401(k) or IRA, and the timing of that tax — annually on interest, or on realisation for capital gains — changes the compounding itself. Fees compound too, in the wrong direction: an annual management charge of 1 percent against a 7 percent return removes far more than a seventh of the outcome over thirty years, because the fee is deducted from a balance that would otherwise have kept compounding. The honest way to use a projection like this is to enter a real, after-fee rate rather than a headline one, and to treat the result as one scenario rather than a forecast.
£10,000 at 7% with no further contributions
| Years | Balance | Growth in that decade |
|---|---|---|
| 10 | £19,672 | £9,672 |
| 20 | £38,697 | £19,025 |
| 30 | £76,123 | £37,426 |
| 40 | £149,745 | £73,622 |
Each decade adds roughly twice the previous one. Nothing is contributed after the initial £10,000.
Frequently asked questions
What is compound interest?
Interest earned on previous interest as well as on the original amount. It is what makes the growth curve bend upward instead of rising in a straight line.
What is the formula?
A = P(1 + r/n)^(nt), where P is the principal, r the annual rate, n the compounding periods per year and t the years.
Why does starting early matter so much?
Time sits in the exponent, so its effect multiplies. £10,000 at 7% roughly doubles in the first decade and adds nearly four times the original sum in the third.
How much does compounding frequency matter?
Less than expected. £10,000 at 5% for a year yields £500 annually, £511.62 monthly and £512.67 daily. The monthly-to-daily difference is negligible.
What is the difference between nominal and effective rate?
Nominal ignores compounding frequency; effective (AER or APY) includes it. A nominal 5% compounded monthly has an effective rate of 5.12%.
Should I account for inflation?
Yes. At 2.5% inflation a 7% nominal return is about 4.4% real. Entering the real rate gives a projection in today's purchasing power.
Do fees really matter that much?
Enormously, because they compound too. A 1% annual charge against a 7% return removes far more than a seventh of the final outcome over decades.
Is this a prediction of what I will earn?
No. It models a constant rate, which no real investment delivers. Treat it as one scenario among many, not a forecast.
Is my data uploaded?
No. All calculation happens in your browser and nothing you enter is transmitted.
Last updated
Standard compound interest formula. Effective annual rate definitions follow UK AER and US APY conventions. Not financial advice.