WorthMorrow

Compound Interest Calculator

This calculator projects how a starting balance and regular monthly contributions could grow over time when returns are reinvested. It is for anyone comparing saving amounts, time horizons or assumed rates of return.

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Educational estimates, not advice. Results depend on the assumptions you enter and are not predictions or personalised financial, investment, tax or legal advice. Read the financial disclaimer.

Calculator

Projected portfolio value

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Total principal saved

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Compound interest earned

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Capital and deposits

Between 1 and 50 years.

Rate and compounding

An assumption, not a forecast.

Composition at the end of the period

  • Principal: –
  • Compound interest: –

How the calculation works

Each month the balance earns the monthly share of the annual rate (for monthly compounding), then the deposit is added. For quarterly or annual compounding, interest is added once per quarter or year. Over the chosen years the model adds up all deposits and all growth.

A = P(1 + r/n)nt for a single deposit; regular deposits are added month by month

P is the amount, r the annual rate, n the compounding periods per year and t the years.

Key assumptions

  • The rate of return is constant every year. Real returns vary, and may be negative in some years.
  • Fees, taxes and inflation are not deducted. To estimate purchasing power, subtract expected inflation from the return you enter.
  • Deposits are the same each month and are made on time.
  • With quarterly or annual compounding, deposits made between compounding dates do not earn interest until the next date.

Worked example

Starting balance 10,000, monthly contribution 500, expected return 8% a year compounded monthly, deposits at month end, over 20 years (figures in US dollars):

  • Total principal saved: 130,000.00 (10,000 + 240 deposits of 500)
  • Projected balance: 343,778.24
  • Compound interest earned: 213,778.24, or 62.2% of the final balance

The 8% is an assumption, not a forecast. Change it to 5% or 3% to see how sensitive the result is.

How to interpret the result

The projected value is the answer to “what if this rate held for this long”, not a prediction. The split between contributions and growth shows how much of the end result comes from what you put in and how much from compounding. Early years are dominated by contributions; the share from growth rises the longer the money stays invested.

Common mistakes

  • Entering a hoped-for return instead of a cautious one.
  • Ignoring inflation, so the future figure looks larger in purchasing-power terms than it is.
  • Assuming contributions will never be interrupted.
  • Comparing results across different compounding settings without noting the difference.