Compound Interest Calculator

Compound Interest Calculator overview

This calculator estimates how a starting balance and regular monthly deposits could grow when interest is added to the balance and earns interest in later periods. It separates the amount contributed from the estimated growth so the result is easier to check.

The result is a projection, not a forecast. It assumes the same annual return and monthly deposit for the full period. Real savings rates and investment returns can change, and fees, tax and inflation are not included.

How the monthly projection works

Start with the opening balance. For each month, multiply the current balance by (1 + annual rate ÷ 1,200), then add the monthly deposit. Repeat this for 12 months per year. The contribution total is the initial amount plus every end-of-month deposit; growth is the difference between projected balance and contributed cash.

The year-by-year table uses the very same month-by-month calculation as the final result, so you can see when growth begins contributing more to the balance. Changing the amount, deposit, rate or time refreshes both the final result and the breakdown.

Compound interest formula explanation

For a starting lump sum, the standard formula is FV = P × (1 + r ÷ n)^n×t, where P is the starting amount, r is the annual rate as a decimal, n is the number of compounding periods each year and t is the number of years.

Regular deposits require an additional annuity calculation. This calculator handles that month by month so it can show the combined future balance, total cash contributed and the difference attributed to compound growth.

Step-by-step instructions

1. Enter the amount already saved or invested. Use zero if there is no starting balance.
2. Enter the amount you expect to add at the end of each month.
3. Enter an annual return or interest rate and the number of years.
4. Calculate the result, then compare the final balance with the contributed amount.
5. Run a lower-rate or lower-deposit scenario before relying on the result.

Worked compound interest examples

$1,000 starting amount plus $200 each month at 6%

After the first year, you have contributed $3,400 ($1,000 initially plus $2,400 in deposits), and the projected balance is about $3,529, including approximately $129 in growth. At five years the projection is about $15,303 from $13,000 contributed. At ten years it is about $34,595 from $25,000 contributed, with around $9,595 of projected growth. All examples assume monthly compounding, end-of-month deposits and an unchanged 6% annual rate.

$10,000 with no monthly deposits

With a 5% annual rate for five years and no further deposits, the same monthly calculation gives approximately $12,834. The difference from $10,000 is projected growth, before fees, tax and inflation.

To compare possible outcomes, change just one input at a time—such as the annual rate or monthly deposit—and compare the resulting year-by-year balances. A smooth constant-rate illustration is not a prediction of actual investment returns.

How to interpret the result

The final balance is useful only when the assumptions are realistic. A steady 6% entry does not mean the balance will rise smoothly by 6% every year. Savings accounts can change their rate, and investments can produce positive or negative returns.

Use a range. A conservative scenario can use a lower rate or missed deposits, while a stronger scenario can use the amount you could consistently contribute without relying on perfect behaviour.

Common mistakes to avoid

• Entering a monthly rate in the annual-rate field.
• Treating an investment return as guaranteed.
• Ignoring account fees, investment fees, tax and inflation.
• Assuming deposits will never be missed or reduced.
• Comparing a promotional savings rate with a long-term rate without checking its conditions.

Benefits and limitations

The benefit of the Compound Interest Calculator is speed with structure.

Benefits

• Separates contributed cash from estimated growth and shows each completed year.
• Includes a starting amount and regular monthly deposits.
• Makes it quick to compare different rates, deposits and time periods.

Limitations

• Assumes a constant rate and constant monthly deposit.
• Uses monthly compounding and end-of-month deposits.
• Does not include tax, fees, inflation, withdrawals or changing returns.
• Does not model investment volatility or guarantee a future balance.

Summary

Use the calculator to estimate a future balance from a starting amount, monthly deposits, an annual rate and time. Compare the estimated growth with the cash contributed, then rerun the calculation with more conservative assumptions.

This calculator is general information only and is not financial, tax or legal advice.