Compound Interest Calculator

Q: What's a realistic annual return to use?

There is no single correct future-return assumption. Investor.gov notes that investments do not have a set rate of return; use several scenarios and treat historical averages as context rather than a forecast.

Q: How much difference does starting early make?

A lot. An investor who contributes $500/month from age 25 to 35 (10 years) at 7% can end up with more at age 65 than someone who contributes $500/month from age 35 to 65 (30 years), because the early investor's money had more time to compound.

Q: What is the Rule of 72 and how does it relate?

The Rule of 72 estimates how long it takes to double your money: divide 72 by your annual return. At 7%, money doubles roughly every 10.3 years. This calculator shows the exact result; the Rule of 72 is a fast mental shortcut.

Q: Should I use nominal or inflation-adjusted returns?

Nominal returns show the raw future dollar amount. Inflation-adjusted (real) returns show what that money will actually buy. This calculator lets you toggle both. As a rough guide, subtract 2-3% from nominal returns to estimate real returns.

See how your money grows over time — and exactly how much of the result is your contributions versus investment growth.

If you invest $10,000 today and add $500 every month, at a 7% annual return your money could grow to about $300,851 in 20 years. You would contribute $130,000; compounding would add roughly $170,851 — more than half of the final balance. Compound interest works because your returns start earning returns of their own, so growth accelerates over time. Adjust any amount, rate or time horizon below to model your own plan, and see the exact contribution-versus-growth split.

Your plan

Calculations run in your browser. Inputs are not stored.

Initial investment

Monthly contribution

Annual return

Illustrative assumptions only. Adjust the rate for your own model.

Time horizon

20 years

Compound frequency

How often interest is credited to your balance — your monthly contribution stays the same.

Adjust for inflation

Estimated balance after 20 years

$300,851

You invested$130,000

Investment growth$170,851

ContributionsGrowth

Show yearly breakdown

Year	Contributions	Growth	Balance

The default 7% is an illustrative nominal annual return before inflation, not a forecast or a historical real return. If inflation adjustment is enabled, it is applied once to the nominal result. Do not subtract inflation again from an already real return.

How this calculation works

The formula

With monthly contributions added at the end of each month, the balance after N months is:

FV = P · (1+i)^N + M · ( ((1+i)^N − 1) / i )

P = initial investment · M = monthly contribution · i = monthly rate (annual rate ÷ 12, adjusted for compound frequency) · N = number of months.

Assumptions

Contributions are added at the end of each month (ordinary annuity).
The annual return is a nominal rate; results are pre-tax and pre-inflation.
Returns are compounded at the frequency you select (default: monthly).
The return rate is assumed constant for the whole period — no market volatility is modeled.
Fees and taxes are not included; they reduce the return you keep. Inflation adjustment is a separate purchasing-power calculation.
When "Adjust for inflation" is on, the final balance and your contributions are discounted to today's dollars using a constant annual inflation rate.

View the formula →

Educational purposes only. Not financial advice. See the full methodology and disclaimer.

Worked examples

See how the numbers play out in real scenarios. All examples assume monthly contributions at the end of each month and a constant annual return.

Example 1: Steady saving for 20 years

Starting balance: $10,000 · Monthly contribution: $500 · Annual return: 7% · Time: 20 years

Final value

$300,851

You invested

$130,000

Growth

$170,851

Over 20 years, you contribute $130,000 of your own money. Investment growth adds $170,851 — meaning 56.8% of your final balance comes from compounding, not from your contributions. This is the power of time in the market.

Example 2: Small contributions, long horizon

Starting balance: $5,000 · Monthly contribution: $200 · Annual return: 7% · Time: 30 years

Final value

$284,577

You invested

$77,000

Growth

$207,577

Even with a modest $200/month contribution, 30 years of compounding turns $77,000 of contributions into $284,577. 72.9% of the final balance is growth — illustrating why starting early and staying consistent matters more than investing large sums later.

Example 3: Aggressive saving, higher return

Starting balance: $0 · Monthly contribution: $1,000 · Annual return: 10% · Time: 25 years

Final value

$1,326,833

You invested

$300,000

Growth

$1,026,833

At a 10% assumed return (optimistic but historically possible for equities), $1,000/month for 25 years could reach $1.33 million. 77.4% comes from compound growth. Note: a 10% return is not guaranteed — actual returns will vary, and this example is hypothetical.

All examples are hypothetical and assume a constant annual return with no taxes, fees, or inflation. Actual investment results will vary. See full disclaimer.

Compound interest, explained

How do you calculate compound interest with monthly contributions?

We compound your balance monthly and add your monthly contribution at the end of each month. The balance after N months is FV = P(1+i)^N + M(((1+i)^N−1)/i), where i is the monthly rate, P the initial investment and M the monthly contribution.

Does the calculator include taxes and inflation?

By default results are nominal, pre-tax and pre-inflation. Turn on Adjust for inflation in the calculator to see your result in today's dollars — it discounts the final balance and your contributions by the inflation rate you choose (default 3%). Taxes and fees are still not included.

Why does compound frequency matter?

More frequent compounding credits interest to your balance more often, so it starts earning its own interest sooner. At the same nominal rate, daily compounding grows slightly faster than annual compounding — try switching the setting above to see the difference.

What's a realistic annual return to use?

Historical stock-market averages are often quoted around 7–10% before inflation (nominal). A 4% rate is a conservative assumption, and 10% is an optimistic long-run stock return. Past performance never guarantees future results.

How much difference does starting early make?

A lot. Consider two investors who both earn 7% annually and want to retire at 65. Investor A contributes $500/month from age 25 to 35 (10 years, $60,000 total), then stops. Investor B contributes $500/month from age 35 to 65 (30 years, $180,000 total). At 65, Investor A has roughly $565,000 while Investor B has roughly $540,000. The early investor contributed one-third as much but ends up with more — because their money had more time to compound.

What is the Rule of 72 and how does it relate?

The Rule of 72 is a quick mental shortcut: divide 72 by your annual return to estimate how many years it takes to double your money. At 7%, money doubles roughly every 10.3 years (72 ÷ 7 = 10.3). At 10%, every 7.2 years. This calculator shows the exact result; the Rule of 72 gives you a fast estimate before you even open the tool. Try our Rule of 72 calculator to see it in action.

Should I use nominal or inflation-adjusted returns?

Both tell a different story. Nominal returns show you the raw dollar amount in the future — useful for comparing investment options. Inflation-adjusted (real) returns show you what that money will actually buy — useful for retirement planning. This calculator lets you toggle "Adjust for inflation" to see both. As a rough guide, subtract 2–3% from your nominal return to estimate the real return. A 7% nominal return is roughly 4–5% after inflation.