How to use it
Enter your starting amount, the money you’re putting in on day one.
Enter the annual interest rate as a percentage.
Choose the number of years you plan to leave the money invested.
Choose how often interest is compounded: yearly, quarterly, monthly or daily.
If you plan to add money regularly, enter a monthly contribution.
Read the result: the final balance, the total you paid in and the interest earned.
Try different scenarios. Changing one number at a time is the quickest way to see what matters most.
The formulas
Without regular contributions
A = P × (1 + r ÷ n)^(n × t)
With regular contributions, the deposits are added on top, with each one earning interest from the moment it goes in:
A = P × (1 + r ÷ n)^(n × t) + PMT × ((1 + r ÷ n)^(n × t) − 1) ÷ (r ÷ n)
Here PMT is the amount you add each period. This version assumes deposits are made at the end of each period, and that you contribute as often as interest is compounded, for example monthly deposits with monthly compounding.
Worked examples
A lump sum. You invest $10,000 at 5%, compounded yearly, for 10 years.
10,000 × 1.05¹⁰ = $16,288.95
That’s $6,288.95 of interest. With simple interest, which is calculated only on the original amount, you’d have earned $5,000 and ended up with $15,000. Compounding gave you an extra $1,288.95 for doing nothing.
Regular contributions. You start with $5,000 and add $200 a month at 6%, compounded monthly, for 20 years.
Final balance: about $108,960
What you paid in: $5,000 + (200 × 240) = $53,000
Interest earned: about $55,960
More than half of the final balance came from interest.
Time matters more than you’d think
Take the same $200 a month at 6%, with no starting amount, and compare two timelines:
20 years: about $92,400 (you paid in $48,000)
30 years: about $200,900 (you paid in $72,000)
Ten extra years added only $24,000 of your own money, yet the final balance more than doubled. The longest stretches of growth come at the end, which is why starting early can matter more than saving a larger amount later.
Does compounding frequency matter?
A little, but less than most people expect. For the $10,000 at 5% over 10 years:
Compounded yearly: $16,288.95
Compounded monthly: $16,470.09
That’s a difference of about $181. The interest rate and the number of years have a far bigger effect than how often interest is added.
A quick mental shortcut: the Rule of 72
To estimate how long it takes money to double, divide 72 by the interest rate. At 6%, 72 ÷ 6 = 12, so your money doubles in roughly 12 years. At 8% it’s about 9 years. It’s an approximation, but it’s close enough for a quick sense of scale.
What the calculator doesn’t show
The result is a projection based on a fixed rate that never changes. Real life is messier:
Returns vary. Savings accounts, bonds and shares don’t pay the same rate every year, and investments can lose value.
Inflation reduces what the money buys. $100,000 in 25 years will purchase less than $100,000 does today.
Taxes and fees take a share. Account fees, fund charges and tax on interest all reduce your real growth.
Treat the figure as a rough guide for planning, not a promise.
Mistakes worth avoiding
Using an unrealistic rate. A rate that’s too optimistic gives a result that’s too good to be true. Use a cautious figure.
Mixing up the rate and the yield. The nominal rate and the effective annual yield (APY) can differ slightly when interest compounds more than once a year. Check which one your account quotes.
Forgetting to count your own deposits. Large final numbers feel impressive, but remember how much of it is money you put in.
Ignoring inflation. A balance that looks large in the future will be worth less in today’s terms.
Stopping too early. Withdrawing money in the early years costs the most, because those deposits had the longest time to grow.
Frequently asked questions
What’s the difference between simple and compound interest?
Simple interest is calculated only on your original amount. Compound interest is calculated on your original amount plus all the interest already added, so it grows faster over time.
What does “compounded monthly” mean?
Interest is calculated and added to your balance every month. The next month’s interest is then worked out on the new, larger balance.
Can I use this for debt as well as savings?
Yes. The same maths shows how a debt grows when interest is added and not paid off, such as with a credit card. It’s a good way to see why carrying a balance gets expensive.
Why does my bank’s figure differ from the result?
Banks may compound at different intervals, use different day-count conventions, deduct fees or change rates over time. The calculator uses a fixed rate and a standard formula, so small differences are normal.
Is the interest rate I enter guaranteed?
No. It’s the rate you assume. Check what your account or investment actually offers, and remember that returns on investments are never guaranteed.
How do regular contributions change the result?
Every deposit starts earning interest as soon as it goes in. A steady monthly amount can add up to more than a large single payment, because small sums are given time to compound.
This calculator provides estimates for general information only and is not financial or investment advice. Actual returns will vary. Please speak to a qualified financial adviser before making investment decisions.