How to Use This Calculator
- 1
Set your starting balance
Enter what you have saved or invested today. Starting from zero works too — steady contributions do most of the heavy lifting in the early years anyway.
- 2
Add a monthly contribution
This is the amount you'll deposit every month going forward. Even modest amounts matter: $200 a month is $2,400 a year before any growth is counted.
- 3
Choose a rate and time horizon
For a high-yield savings account, use the advertised APY. For long-term stock investments, 7% is a common inflation-adjusted planning figure based on historical S&P 500 returns.
- 4
Pick a compounding frequency
Select how often interest is credited — monthly is typical for savings accounts, daily for some banks, annually for many bonds. The differences are real but smaller than most people expect.
- 5
Study the three-color breakdown
The bar under the results splits your future balance into starting money, deposits, and pure interest. Over long horizons, the interest slice quietly becomes the biggest one.
How It Works
The projection combines two pieces of compound growth: your starting balance snowballing on its own, plus a stream of monthly deposits that each start compounding the moment they arrive.
In this expression P is the starting balance, C is the monthly deposit, i is the monthly growth rate, and n is the number of months. The first term grows your original money; the second sums up every deposit along with the compounding it earns from its own arrival date onward. When you pick a compounding frequency other than monthly, the calculator converts the rate into an equivalent monthly figure first, so deposits and interest always line up on the same schedule.
Worked example
Start with $10,000, add $200 a month, and earn 7% compounded monthly for 20 years. The monthly rate is 0.07 ÷ 12 ≈ 0.00583 and n = 240 months.
Your future value comes to about $144,573. The original $10,000 alone grows to roughly $40,387, and the 240 deposits contribute the rest.
Out of pocket you put in just $58,000 — meaning around $86,573, well over half the final balance, is growth you never had to earn at a job.
Frequently Asked Questions
What is the difference between compound and simple interest?
Simple interest is calculated only on your original principal, while compound interest is calculated on the principal plus all the interest already earned. Put $10,000 at 7% simple interest for 20 years and you earn a flat $700 a year — $14,000 total. Compounded monthly, the same money earns about $30,387, more than double, because each month's interest starts earning its own interest.
Does compounding frequency really matter?
Less than you'd think. $10,000 at 5% for 10 years grows to $16,289 compounded annually, $16,470 compounded monthly, and $16,487 compounded daily — a spread of under $200 over a decade. The rate itself and how long you stay invested matter far more. Banks advertise APY precisely so you can compare accounts without worrying about frequency at all.
What rate of return should I assume for stock investments?
The S&P 500 has returned roughly 10% a year on average over the past century, which works out to about 7% after inflation. Most financial planners model long-term stock portfolios at 6–8% real returns. For money in a high-yield savings account, use the actual APY — around 4% lately — and for a blended stock-and-bond portfolio, something in the 5–6% range is a reasonable middle ground.
What is the Rule of 72?
It's a mental shortcut for estimating doubling time: divide 72 by your annual return to get the approximate years needed for money to double. At 7%, that's 72 ÷ 7 ≈ 10 years; at 4%, about 18 years. It also runs in reverse — if you want your money to double in 6 years, you'd need roughly a 12% return. The rule is remarkably accurate for rates between 4% and 12%.
How much difference does starting early actually make?
A huge one, because the final years of compounding do the most work. Saving $200 a month at 7% from age 25 to 65 builds about $525,000. Wait until 35 and the same monthly habit reaches only about $244,000 — less than half, even though you contributed just $24,000 less. Every decade you delay roughly halves the ending balance.
Do I pay taxes on compound interest?
Usually, yes. Interest from savings accounts and CDs is taxed as ordinary income in the year it's credited — your bank sends a 1099-INT for anything over $10. Investment gains in a regular brokerage account are taxed when you sell, at capital-gains rates. To let compounding run untaxed, use tax-advantaged accounts: Roth IRAs and 401(k)s shelter growth entirely, which is a major reason advisors push them for retirement money.