The compound interest calculator projects how a starting amount plus monthly contributions grows when returns earn returns. It compounds monthly — the schedule most savings and investment accounts actually use.
The formula
For the lump sum: FV = P × (1 + i)^n. For the monthly contributions: FV = PMT × ((1 + i)^n − 1) ÷ i — where i is the monthly rate (annual ÷ 12) and n the number of months. The calculator adds both streams together.
Worked example
$10,000 to start, $500 added monthly, 8% annual return, 20 years: the lump sum grows to about $49,000, while the $120,000 of contributions grows to roughly $294,000 — a total near $343,000, of which about $213,000 is growth. The later years dominate: more than half the growth arrives in the final third of the timeline. That is compounding’s whole argument for starting early.
How to read the result
Honest caveats: 8% is a long-run stock-market-like assumption, not a promise — real returns arrive lumpy, and inflation quietly eats 2-3% of purchasing power a year, so the “real” figure is smaller than the nominal one shown. Fees compound too: a 1% annual fee on this example costs tens of thousands over 20 years. To reverse-engineer a growth rate you’ve already achieved, use the CAGR calculator.
How often should interest compound?
This tool compounds monthly, matching most savings accounts and investment models. More frequent compounding helps, but the difference between monthly and daily is small.
What return rate should I assume?
Long-run equity returns have historically averaged 7-10% nominal; conservative planners use 5-7%. Guaranteed-rate products state theirs explicitly.
Does this account for inflation?
No — results are nominal. Subtract an assumed 2-3% from your return rate to see an approximate inflation-adjusted picture.
Lump sum now or monthly contributions?
Mathematically, money invested earlier compounds longer. But steady monthly investing builds the habit and smooths out market timing — most people should do both.