How often is interest compounded?

Choose monthly or annual compounding. Contributions are applied at the end of each period unless noted otherwise.

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Compound Interest Calculator — Calculator

Future value with compound interest

FV = P(1 + r/n)^(nt) + PMT Ã— [((1 + r/n)^(nt) âˆ’ 1) / (r/n)]

P is the initial principal, r is the annual rate, n is compounding periods per year, t is years, and PMT is the periodic contribution. Interest earns interest on prior balances and contributions.

Step-by-step

Enter starting balance
Include existing savings or investment principal.
Set annual rate and compounding
Choose monthly or annual compounding to match your account.
Add recurring contributions
Monthly or annual deposits accelerate growth through dollar-cost averaging.
Set time horizon
Longer periods amplify the compounding effect.

Worked example: $10,000 invested for 20 years

$10,000 initial, $200/month contributions, 7% annual return, monthly compounding.

Principal grows at 7%/12 each month
$200 added at end of each month
Interest compounds on growing balance

Projected balance â‰ˆ $118,000 (illustrative; actual returns vary).

Key definitions

Compound interest: Interest calculated on principal plus accumulated interest.
Compounding frequency: How often interest is added to the balance (monthly, annually, etc.).
Future value: The projected balance at the end of the investment period.

Common use cases

Retirement savings projections
College fund planning
Comparing savings account vs investment growth
Understanding the value of starting early

Tips

Start early â€” time in market matters more than timing the market for long horizons.
Reinvest dividends to maximize compounding.
Use conservative return assumptions (5â€“7%) for planning.

Common mistakes

Using nominal returns without considering inflation

Fix: Subtract estimated inflation for real purchasing power.

Ignoring taxes on investment gains

Fix: Tax-advantaged accounts (401k, IRA) change net outcomes.

Expecting linear growth

Fix: Compounding is exponential â€” most growth happens in later years.

Frequently asked questions

Step-by-step

Enter starting balance

Include existing savings or investment principal.

Set annual rate and compounding

Choose monthly or annual compounding to match your account.

Add recurring contributions

Monthly or annual deposits accelerate growth through dollar-cost averaging.

Set time horizon

Longer periods amplify the compounding effect.

Common mistakes

Using nominal returns without considering inflation

Fix: Subtract estimated inflation for real purchasing power.

Ignoring taxes on investment gains

Fix: Tax-advantaged accounts (401k, IRA) change net outcomes.

Expecting linear growth

Fix: Compounding is exponential â€” most growth happens in later years.

Future value with compound interest

Step-by-step

Enter starting balance

Set annual rate and compounding

Add recurring contributions

Set time horizon

Worked example: $10,000 invested for 20 years

Key definitions

Common use cases

Tips

Common mistakes

Related guides

Related calculators

Frequently asked questions

How often is interest compounded?

Are my inputs saved?

Future value with compound interest

Step-by-step

Enter starting balance

Set annual rate and compounding

Add recurring contributions

Set time horizon

Worked example: $10,000 invested for 20 years

Key definitions

Common use cases

Tips

Common mistakes

Related guides

Related calculators

Frequently asked questions

How often is interest compounded?

Are my inputs saved?