Compound Interest Calculator — Free Growth Projections
This free compound interest calculator shows how an investment grows over time when earnings are reinvested. Enter your starting balance, regular contributions, expected annual return, and investment horizon to see year-by-year projections with a chart.
How Compound Interest Works
Compound interest means you earn returns not only on your initial principal but also on all previously accumulated interest. The formula for compound interest with regular contributions is:
A = P(1 + r/n)^(nt) + C × [((1 + r/n)^(nt) − 1) / (r/n)]
- A = final balance
- P = initial principal
- r = annual interest rate (decimal)
- n = compounding periods per year
- t = number of years
- C = regular contribution per period
Calculator Inputs
- Initial Principal ($) — the lump sum you start with
- Contribution ($) — regular addition (monthly or annual)
- Expected Annual Return (%) — the average annual growth rate
- Investment Horizon (Years) — how long you stay invested
- Compounding Frequency — daily, monthly, or annual
Example: $10,000 at 8% for 20 Years
Starting with $10,000, adding $500/month, at 8% annual return compounded monthly over 20 years yields approximately $343,778 in total value — of which $130,000 is contributions and $213,778 is compounded interest. The interactive area chart shows contributions and accumulated interest year by year.
Frequently Asked Questions
- What is compound interest?
- Compound interest is interest calculated on the initial principal and also on accumulated interest from previous periods. It causes investments to grow exponentially over time rather than linearly.
- How often should interest compound?
- The more frequently interest compounds, the faster the balance grows. Daily compounding produces slightly more growth than monthly, which produces more than annual. For most long-term investment accounts, monthly compounding is the standard.
- What annual return rate is realistic?
- The S&P 500 has historically returned approximately 10% annually before inflation (around 7% after inflation). Individual results vary based on asset allocation and market conditions.
- Does this calculator account for inflation?
- No. To adjust for inflation, subtract the expected inflation rate (typically 2–3%) from your annual return rate input.