Compound Interest Calculator
How this compound interest calculator works
This calculator projects how a starting balance plus regular monthly contributions can grow when interest is reinvested at a chosen compounding frequency. It runs the standard compound-interest formula used by banks and investment planners, so the math mirrors how a savings account, CD, or recurring investment actually behaves.
The compound interest formula
Final balance = P(1 + r/n)nt + PMTperiodic × [((1 + r/n)nt − 1) / (r/n)]
- P = starting principal (your initial deposit)
- r = annual interest rate as a decimal (7% → 0.07)
- n = compounding periods per year (1 annual, 12 monthly, 365 daily)
- t = number of years
- PMTperiodic = contribution per compounding period, derived from your monthly contribution
The first term grows your initial deposit; the second term is the future value of an annuity that captures every monthly contribution you make over the term.
How contributions are converted to each period
Your contribution is entered monthly for convenience, then converted to the compounding period so the math stays consistent:
- Monthly (n=12): one contribution per period — periodicPMT = your monthly amount.
- Annually (n=1): twelve months roll up into one period — periodicPMT = monthly amount × 12.
- Daily (n=365): each month splits into ~30.4375 days — periodicPMT = monthly amount ÷ 30.4375.
What the results show
- Final balance — principal plus all contributions plus all interest earned.
- Total contributions — the cash you actually put in: principal plus monthly contribution × 12 × years.
- Total interest earned — the growth above your contributions, which is what compounding produced.
Why compounding frequency matters less than you’d think
A 7% annual rate is a 7% annual rate regardless of how often it compounds — the difference between daily and monthly is a fraction of a percent per year. Far more important are your contribution amount, the rate you earn, and especially time. Doubling your holding period from 15 to 30 years doesn’t double your balance — it usually triples or quadruples it, because the back half of compounding is where most of the growth happens.