FV = P(1+r)^n + PMT·(((1+r)^n−1)/r) with monthly compounding.
A compound interest calculator is a tool that projects how money grows when interest is added to the balance and then earns interest itself. You enter the starting amount, the interest rate, the time period, and how often interest compounds, and it calculates the future value. It is the standard way to estimate the long-term growth of savings and investments.
Compound interest is often called "interest on interest." Each period, the interest earned is added to your balance, so the next period's interest is calculated on a larger amount — and the growth accelerates over time.
The compound interest formula is:
A = P(1 + r/n)^(n × t)
Here, A is the final amount, P is the principal (starting amount), r is the annual interest rate as a decimal, n is the number of compounding periods per year (1 for yearly, 12 for monthly, 365 for daily), and t is the number of years.
The compounding frequency n matters: interest added more often starts earning its own interest sooner. Monthly compounding therefore produces a slightly larger balance than yearly compounding at the same nominal rate. The effect is small in one year but adds up over decades.
Time is the most powerful input. Because growth is exponential, the balance in the later years grows much faster than in the early years — which is why starting early matters so much for long-term savings.
In this example, the rate is assumed for illustration. You invest $10,000 at 7% annual interest for 10 years.
Compounded yearly: A = 10,000 × (1.07)^10 = $19,671.51. The interest earned is $9,671.51.
Compounded monthly: A = 10,000 × (1 + 0.07/12)^120 = $20,096.61 — about $425.10 more than yearly compounding, simply because interest is added twelve times a year instead of once.
Note that nearly half the final balance is earned interest, not the original deposit — that is compounding at work.
Each contribution starts compounding from the month it is added, so regular deposits grow the balance much faster than a lump sum alone.
No — enter the rate you expect. Actual investment returns vary; this is an estimate.
