How it works
Enter a starting amount, an annual interest rate, a number of years, and an optional monthly contribution. We compound annually in your browser and show the final balance and total interest earned.
In detail
Compound interest is interest earned on both your original sum and the interest already added — growth accelerates over time. The future value is:
FV = P(1+r)t + PMT × (((1+r)t − 1) ÷ r)
where P is the starting principal, r the annual rate, t the years and PMT the annual contribution. This calculator compounds annually for clarity.
Why it matters
- Starting earlier beats saving more later — time is the dominant factor.
- Even modest monthly contributions add up over decades.
This is an illustration using a fixed assumed rate; real returns fluctuate. Not financial advice.
FAQ
What is compounding?
Earning interest on your interest, so the balance grows faster the longer it is invested.
How often is interest compounded here?
Annually, for simplicity. More frequent compounding would yield slightly more.
Is the result guaranteed?
No. The rate is an assumption; real investments go up and down.