See how savings grow when interest earns interest. Results update as you type.
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Results are estimates for education only and are not financial advice. Assumes a constant rate and contributions at the end of each compounding period.
With simple interest you earn only on your deposits. With compound interest you also earn on past interest, so growth speeds up over time. That is why starting early usually beats saving more later.
A = P × (1 + r ÷ f)^(f × t) + PMT × (((1 + r ÷ f)^(f × t) − 1) ÷ (r ÷ f)). Here A is the future value, P is the initial deposit, PMT is the contribution each period, r is the annual interest rate, f is the number of compounding periods per year, and t is the number of years. Contributions are added at the end of each period.
An initial deposit of $10,000 plus $200 contributed at the end of each month, at 6% annual interest compounded monthly for 20 years, grows to $125,510.22. You put in $58,000 in total, so interest earned is $67,510.22.
Yes, slightly, at the same annual rate. With monthly compounding, interest starts earning its own interest twelve times a year instead of once, so the balance grows a little faster. The gap is small over a few years but grows with time and with larger balances.
The money keeps growing on its own through compounding, just more slowly than if you kept adding to it. The existing balance still earns interest every period, so even without new contributions the future value keeps rising as long as the money stays invested.
Use this calculator whenever the question is "what will this grow to" rather than "what can I afford." It fits savings plans, education funds, and long term investing. Enter what you have now, what you can add each month, the return you expect, and the number of years. The result separates your own contributions from the interest earned, so you can see how much of the final number is growth and how much is money you put in.
Compounding means each period's interest is calculated on a balance that already includes past interest. That is why growth speeds up over time instead of moving in a straight line. Take $5,000 to start, plus $300 at the end of each month, at 7 percent compounded monthly. After 25 years the balance is $271,648.60. You contributed $95,000, so interest earned is $176,648.60. Stretch the same plan to 35 years and the balance becomes $597,847.14, from $131,000 contributed and $466,847.14 of interest. The extra ten years add only $36,000 of contributions but $290,198.54 of interest. Time in the plan matters more than the size of any single contribution.
Three mistakes weaken most plans. First, people use one optimistic return for every year. Real returns vary, and a single bad stretch early on changes the outcome. Run the calculator at a lower return too, and plan around the lower number. Second, people forget inflation, taxes, and fees. A 7 percent return before those costs is not a 7 percent return in your pocket. Third, people delay starting because the monthly amount feels small. The example above shows why that is costly. Ten extra years of $300 monthly contributions more than doubled the interest earned, and no later catch-up contribution fully replaces lost years.
It matters a little, not a lot. Monthly compounding beats annual compounding at the same rate, but the gap is small compared with the effects of the return rate, the monthly contribution, and the number of years. If a product advertises daily compounding at a lower rate, compare the final balances rather than the frequency.
No. Treat the calculator result as a scenario, not a forecast. Test at least two returns, for example 5 percent and 7 percent, and check whether your plan still works at the lower one. If it only works at an optimistic return, the plan needs a bigger contribution or a longer horizon.
A lump sum gets more time to compound, so it usually wins when you already have the money. A monthly plan wins on habit: it turns saving into a routine and keeps money going in during market drops, when each contribution buys more. Most people do best with both, a starting amount plus a monthly contribution they can sustain.
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