DDanfio

Compound Interest Calculator

Compound interest pays interest on interest, so a balance grows faster the longer it is left alone. Over twenty years the growth usually outweighs everything deposited, and over forty it dwarfs it.

$

The nominal rate quoted on the account, before compounding is applied.

$

Used to restate the result in today money.

Leave at zero for a retirement account. A taxable account drags on the result each year.

$

Used to work out the deposit needed each period to get there.

Results update as you type. Nothing leaves your device.

Balance after 20 years

$144,572.72

$10,000 to start plus $48,000 of deposits at 7%

Total deposited
$58,000
Growth
$86,573
Effective annual rate
7.23%
In today money
$88,229

Where the final balance comes from

  • Money you put in$58,000.00
  • Growth$86,572.72

The switch from one slice to the other is the point of compounding: late in the term the growth outweighs everything being paid in.

Year by year

YearStartDepositsGrowthEnd
1$10,000.00$2,400.00$801.42$13,201.42
2$13,201.42$2,400.00$1,032.85$16,634.27
3$16,634.27$2,400.00$1,281.01$20,315.28
4$20,315.28$2,400.00$1,547.11$24,262.39
5$24,262.39$2,400.00$1,832.45$28,494.83
6$28,494.83$2,400.00$2,138.41$33,033.24
7$33,033.24$2,400.00$2,466.49$37,899.74
8$37,899.74$2,400.00$2,818.29$43,118.03
9$43,118.03$2,400.00$3,195.52$48,713.55
10$48,713.55$2,400.00$3,600.02$54,713.58
11$54,713.58$2,400.00$4,033.77$61,147.34
12$61,147.34$2,400.00$4,498.86$68,046.20
13$68,046.20$2,400.00$4,997.58$75,443.79
14$75,443.79$2,400.00$5,532.35$83,376.14
15$83,376.14$2,400.00$6,105.79$91,881.93
16$91,881.93$2,400.00$6,720.67$101,002.60
17$101,002.60$2,400.00$7,380.00$110,782.60
18$110,782.60$2,400.00$8,087.00$121,269.60
19$121,269.60$2,400.00$8,845.11$132,514.70
20$132,514.70$2,400.00$9,658.02$144,572.72
Total$10,000.00$48,000.00$86,572.72$144,572.72

Deposits are spread evenly across the compounding periods, so a monthly deposit into a monthly-compounded account earns a full month of interest while the last one earns almost none.

What the rate does to the same plan

Annual rateEffective rateBalance after 20 yearsGrowth
3%3.04%$83,867.95$25,867.95
5%5.12%$109,333.14$51,333.14
7%7.23%$144,572.72$86,572.72
9%9.38%$193,668.89$135,668.89
10%10.47%$225,154.50$167,154.50

A single percentage point of return compounds into real money over a long horizon, and the gap between the highest and lowest rows here is the cost of paying an extra 1% in fees every year.

Hitting the goal

MeasureAmount
Goal$500,000.00
Already covered by the starting amount$10,000.00
Deposit needed monthly$882.30
Deposit needed per year$10,587.60
What the current deposit produces$144,572.72
Shortfall with the current deposit$355,427.28

Reaching $500,000 needs about $882.30 monthly at this rate, assuming the deposits keep their timing and the rate holds.

7% compounded 12 times a year pays an effective 7.23% a year, and a lump sum doubles in about 10.2 years. That is roughly 2 doublings over this horizon, which is why the growth slice grows so fast at the end of the term. In today money the final balance is worth $88,229, so inflation matters as much as the rate over decades.

This calculator compounds period by period, adds regular deposits at the start or end of each period, shows the effective annual rate behind the headline rate, and works out the deposit needed to reach a target.

How this compound interest calculator works

The formula, and why the frequency matters

A lump sum compounds as balance x (1 + rate/periods)^periods. At a 7% nominal rate compounded monthly, the effective rate is 7.229% a year; compounded daily it is slightly higher still. The headline rate is never quite what you earn unless compounding happens once a year.

Deposits compound as an annuity: each one earns interest for the number of periods it is invested. A deposit at the start of the period earns one period more than the same deposit at the end, which is the difference between an annuity due and an ordinary annuity.

Time does more than the rate

A lump sum doubles every 9.97 years at 7%, which is what the rule of 72 approximates: 72 divided by the rate gives 10.3 years. Extending a plan from 20 years to 30 does not add half again to the balance, it roughly doubles it, because the last years are compounding on a much larger base.

The mirror image is that inflation works on the same principle in the other direction. At 2.5% a year, prices rise by more than a fifth over a decade, so a balance that looks large in 2060 money may be modest in today money.

Taxes, fees and the taxable account

In a taxable account, tax on dividends and realised gains takes money out of the compounding base every year, and the cost is larger than the same tax paid at the end. A retirement account defers it, so the whole balance keeps compounding.

Fees are subtracted the same way. A 1% annual fee on a 7% return is not 1% of the outcome: it is roughly a third of the final balance over thirty years, because the fee is compounding too.

Where compounding works against you

The same arithmetic applies to debt, which is why a credit card at 24% doubles what you owe in about three years if nothing is paid. Savings and debt are the same formula with the sign reversed.

That is the argument for contributing early rather than more: money invested at 25 has forty compounding years ahead of it, and money invested at 45 has twenty. The early money does less work but keeps working for longer.

Worked examples

Each example below was run through the calculator on this page when the site was built, so the numbers match what you see when you enter the same inputs.

$10,000 plus $200 a month at 7% for 20 years

Starting amount
$10,000.00
Annual interest rate
7%
Years to grow
20
Compounding
Monthly
Regular deposit
$200.00
Deposit frequency
Monthly
Inflation rate
2.5%
Savings goal
$500,000.00

Balance after 20 years

$144,572.72

$10,000 to start plus $48,000 of deposits at 7%

Total deposited
$58,000
Growth
$86,573
Effective annual rate
7.23%
In today money
$88,229

The deposits add up to $58,000 and the growth adds more than that on top, which is the whole argument for starting early.

The same plan over 30 years

Starting amount
$10,000.00
Annual interest rate
7%
Years to grow
30
Compounding
Monthly
Regular deposit
$200.00
Deposit frequency
Monthly
Inflation rate
2.5%
Savings goal
$500,000.00

Balance after 30 years

$325,159.17

$10,000 to start plus $72,000 of deposits at 7%

Total deposited
$82,000
Growth
$243,159
Effective annual rate
7.23%
In today money
$155,017

Ten more years of the same $200 deposit more than doubles the balance, because the last decade compounds on a much larger base.

A $25,000 lump sum at 8% with no deposits

Starting amount
$25,000.00
Annual interest rate
8%
Years to grow
25
Compounding
Monthly
Regular deposit
$0.00
Deposit frequency
Monthly
Inflation rate
2.5%
Savings goal
$500,000.00

Balance after 25 years

$183,504.40

$25,000 to start plus $0 of deposits at 8%

Total deposited
$25,000
Growth
$158,504
Effective annual rate
8.3%
In today money
$98,981

Nothing is added after the first deposit, yet the growth is several times the original amount: that is compounding working on a single sum.

Frequently asked questions

Does compounding monthly beat compounding annually?

Yes, but by less than people expect. A 7% nominal rate compounded monthly pays an effective 7.229% a year, roughly 0.23 percentage points more than annual compounding on the same money.

What return should I assume?

Use a range rather than a single number: the long-run return of a broad stock market index has been around 7% to 10% a year before inflation and fees, but the sequence of returns matters and any single decade can be far away from the average. Run the calculator at 3% and 8% and plan for the middle.

Is compound interest taxable?

Interest and dividends are normally taxable in the year received in a regular account, while unrealised gains are not. Retirement accounts defer the tax, which is why the tax rate field belongs at zero for a 401(k) or IRA and above zero for a taxable brokerage account.

How much do fees cost over time?

A 1% annual fee on a portfolio returning 7% removes about a third of the final balance over thirty years, because the fee compounds against you exactly as the return compounds for you. Compare the rate table: the difference between 6% and 7% here is what that fee costs.

What is the rule of 72?

It is a mental shortcut for doubling time: divide 72 by the annual rate. At 8% that gives 9 years, against an exact 9.01 years. It is useful for checking whether a claimed return is plausible.

Should I add more each month or invest a lump sum early?

Time in the market does the work, so an earlier lump sum usually beats the same money dribbled in, at the cost of taking the risk immediately. Adding more each month is the practical answer for most people, because the deposit amount is the part you control.

Does inflation change the answer?

It changes what the answer means. At 2.5% a year, prices roughly double in 28 years, so a balance of $500,000 in 2054 buys about what $250,000 buys today. The calculator shows both figures so the nominal number does not flatter the plan.

Assumptions and sources

  • Compounding, annuity and effective-annual-rate formulas: standard future value arithmetic, applied period by period rather than with a closed form, so start-of-period deposits and a mid-term tax drag are both handled exactly.
  • This is not investment advice. Any rate entered here is an assumption, not a forecast, and real returns vary from year to year: a sequence of poor years early in a plan leaves less than the average rate suggests.
  • Inflation is applied as a constant rate for illustration. Actual inflation varies year to year and the basket of goods a household buys differs from the published index.
  • Not modelled: expense ratios and platform fees (enter the net-of-fee rate instead), capital gains tax on withdrawals, contribution limits, required minimum distributions and state tax.

Last reviewed 2026-09-14. This page is an estimate tool, not financial, tax or legal advice.Read the full disclaimer.

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