Compound Interest Calculator
See how savings, a 401(k), IRA, or brokerage account grows with compound interest and monthly contributions.
What is a compound interest calculator?
A compound interest calculator projects how a starting balance grows when the interest it earns is added to the balance and itself earns interest. Enter your starting amount, a monthly contribution, an annual rate, the number of years and how often interest compounds, and it shows the Future value, the Total invested, and the Interest earned.
Compounding is why time matters so much when saving: the interest earned in year 20 is calculated on twenty years of accumulated interest, not just on what you deposited. Use the calculator for a savings account, a CD, a 401(k), an IRA, a brokerage account, or a child's 529 plan — anywhere returns are reinvested.
What $500 a month becomes
Starting with $10,000 and adding $500 a month at a 7% annual return (compounded monthly):
| Years | You contributed | Growth | Balance | Growth as share of balance |
|---|---|---|---|---|
| 5 | $40,000 | $9,973 | $49,973 | 20% |
| 10 | $70,000 | $36,639 | $106,639 | 34% |
| 15 | $100,000 | $86,971 | $186,971 | 47% |
| 20 | $130,000 | $170,851 | $300,851 | 57% |
| 25 | $160,000 | $302,290 | $462,290 | 65% |
| 30 | $190,000 | $501,150 | $691,150 | 73% |
| 40 | $250,000 | $1,225,521 | $1,475,521 | 83% |
By year 20 more than half the balance is growth rather than deposits; by year 40 it is five-sixths. The last ten years add more than the first thirty combined.
The cost of starting late
Saving $500 a month at 7% from age 25 to 65 produces about $1,312,000. Starting at 35 and saving the same amount to 65 produces about $610,000. The ten-year delay costs $60,000 in missed contributions and roughly $640,000 in missed growth — the early dollars are the ones that compound longest.
How much the rate matters
$500 a month for 30 years:
| Annual return | Balance after 30 years |
|---|---|
| 4% | $347,025 |
| 5% | $416,129 |
| 7% | $609,986 |
| 10% | $1,130,244 |
Savings and CD rates are set by the bank and change over time: the 1-year Treasury yield was 4.49% on October 15, 2026 (Federal Reserve H.15), while the FDIC's national average savings rate was 0.37% on September 21, 2026. Stock returns are not guaranteed. A common rule of thumb for long-term planning with a stock-heavy portfolio is about 7% a year after inflation — an assumption to test, not a forecast.
Compounding frequency: how much does it matter?
Less than people think. $10,000 at 5% for 10 years:
| Compounded | Balance after 10 years | Effective annual rate (APY) |
|---|---|---|
| Yearly | $16,288.95 | 5.000% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
Going from yearly to daily compounding adds under $200 on $10,000 over a decade. Banks quote APY (annual percentage yield), which already includes the effect of compounding, so two accounts with the same APY pay the same regardless of how often they compound. If you know an account's APY, enter it as the rate with yearly compounding.
The Rule of 72
Divide 72 by the annual rate to estimate how many years it takes money to double: at 7% about 10.3 years (the exact figure is 10.2), at 10% about 7.2 years, at 4% about 18 years. It also works in reverse for inflation — at 3% inflation, prices double roughly every 24 years, which is why a long-term projection should use a real (after-inflation) return. More shortcuts are in the Rule of 72 guide.
Where compounding works hardest: tax-advantaged accounts
In a taxable account, interest, dividends and realized gains are taxed, which slows compounding. In a 401(k), IRA, HSA or 529 plan, growth compounds untaxed while it stays in the account. For 2026 the IRS employee 401(k) contribution limit is $24,500 ($32,500 with the age-50 catch-up), and the IRA limit is $7,500 ($8,600 with the catch-up); the limits are adjusted for inflation, so check the current figures. An employer match of 50% is an immediate 50% return on the matched dollars before any compounding — the 401(k) retirement calculator includes the match.
Formula
Growth of the starting balance:
A = P × (1 + r ÷ n)n × t
- A = final amount
- P = starting balance
- r = annual rate as a decimal (7% → 0.07)
- n = compounding periods per year (1, 4, 12 or 365)
- t = years
Monthly contributions are added with the future-value-of-an-annuity formula, using the monthly rate m = (1 + r ÷ n)n ÷ 12 − 1 so that it matches the chosen compounding frequency:
FVcontributions = C × ((1 + m)12t − 1) ÷ m
Future value = A + FVcontributions; interest earned = future value − (P + C × 12t). Contributions are assumed to arrive at the end of each month, so a deposit earns nothing in the month it is made. At 0% the future value is simply P + C × 12t. A negative starting balance or contribution gives no result. The effective annual rate (APY) for any nominal rate is (1 + r ÷ n)n − 1.
Worked example
$10,000 to start, $500 a month, 7% a year, 20 years, compounded monthly:
- Starting balance: 10,000 × (1 + 0.07 ÷ 12)240 = 10,000 × 4.0387 = $40,387.39
- Monthly rate m = 0.07 ÷ 12 = 0.005833
- Contributions: 500 × ((1.005833)240 − 1) ÷ 0.005833 = 500 × 520.9267 = $260,463.33
- Future value = 40,387.39 + 260,463.33 = $300,850.72
- Total invested = 10,000 + 500 × 240 = $130,000
- Interest earned = 300,850.72 − 130,000 = $170,850.72
The same $10,000 left alone, with no contributions, becomes $40,387 in 20 years, $81,165 in 30, and $163,114 in 40 — it doubles roughly every ten years at 7%.
How to use this calculator
- Enter the starting balance — what is in the account today (0 is fine).
- Enter the monthly contribution you plan to add at the end of each month.
- Enter the expected annual rate of return. For savings and CDs use the rate the bank quotes; for investments, try more than one assumption.
- Enter the number of years, and choose how often interest compounds (the choice makes little difference).
- Read the Future value, the Total invested, and the Interest earned.
What this calculator does not do
- It assumes deposits at the end of each month; it has no option for deposits at the start of the month or for yearly deposits.
- It keeps the rate and the monthly contribution fixed for the whole period.
- It does not deduct taxes, fees or inflation, and it does not model withdrawals.
- It does not accept a negative balance or contribution.
Using it for retirement planning
- Work in today's dollars. Use a real (after-inflation) return and the result is directly comparable to today's prices.
- Include the employer match. If you contribute 6% of a $75,000 salary ($375 a month) and your employer matches half, enter $562.50 a month.
- Test the downside. Run 4% or 5% as well as 7%. A plan that only works at 10% is a hope, not a plan.
- Increase contributions over time. The calculator assumes a fixed amount; raising it with each pay rise makes the real result better than the projection.
Related tools
- 401(k) retirement calculator — salary, contribution rate and employer match
- Savings goal calculator — the monthly amount needed to hit a target by a date
- Credit card payoff calculator — the same math working against you
Sources
Frequently asked questions
What return should I assume for retirement projections?
There is no guaranteed figure. A common rule of thumb for a stock-heavy portfolio over several decades is about 7% a year after inflation; a mix with more bonds or cash calls for a lower assumption. Use an after-inflation figure so the result is in today's dollars, and run a lower rate too: on $500 a month for 30 years, 5% gives $416,129 and 7% gives $609,986.
What is the Rule of 72?
A shortcut for doubling time: divide 72 by the annual rate. At 7% money doubles in about 10 years, at 10% in about 7, at 4% in 18. It is accurate to within a few months for rates between 4% and 12%. It also shows the cost of debt: a credit card at 24% doubles an unpaid balance in about three years.
Should I max out my 401(k) before a Roth IRA?
A common order: contribute enough to the 401(k) to get the full employer match, then fund a Roth IRA up to its limit ($7,500 for 2026, $8,600 from age 50) if you are eligible, then go back and increase the 401(k). A Roth is attractive if you expect to be in a higher tax bracket in retirement or want tax-free withdrawals; a traditional 401(k) wins if you are in a high bracket now. Many people do some of both.
How do taxes affect compound interest?
In a taxable account, interest and dividends are taxed each year and gains when sold, which removes part of the balance that would otherwise compound. As an illustration, if tax took 15% of each year's 7% return, the account would grow at 5.95% instead: $500 a month for 30 years becomes $497,481 rather than $609,986. Tax-advantaged accounts — 401(k), IRA, Roth, HSA, 529 — let the full balance compound untouched while it stays in the account.
Is APR the same as APY?
No. APR is the nominal annual rate before compounding; APY includes it. A 5% APR compounded monthly is a 5.116% APY. Banks advertise APY on savings (the larger number) and APR on loans (the smaller number). When comparing savings accounts, compare APY to APY.
How often should interest compound?
It matters far less than the rate. On $10,000 at 5% for 10 years, yearly compounding gives $16,289 and daily gives $16,487 — a difference of under 1.3%. Choose an account by its APY (which already reflects compounding) and its fees, not by how often it compounds.
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal: $10,000 at 5% earns $500 every year. Compound interest is paid on principal plus accumulated interest: $500 in year one, $525 in year two, $551 in year three, and $776 by year ten. Most savings accounts and investments compound; some short-term loans and bonds use simple interest.
Can compound interest work against me?
Yes — it is how credit-card debt grows. A $5,000 balance at 24% APR accrues $100 of interest in the first month, so paying $110 a month takes 122 payments (10 years 2 months) and costs $8,319.96 in interest — more than the balance. Paying $150 a month cuts that to 56 payments and $3,322.09. The credit card payoff calculator runs the numbers.