How to use
- Enter an initial deposit and a monthly contribution. Set the contribution to 0 to grow a lump sum, or the deposit to 0 for a pure savings plan.
- Choose the annual rate, number of years, compounding frequency and whether you contribute at the start or end of each month.
- The final balance, interest earned and a year-by-year table update instantly. Amounts work for any currency.
How it’s calculated
r = annual rate, n = compounding periods per year (1 yearly, 2 semiannually, 4 quarterly, 12 monthly, 365 daily).
| Item | Formula |
|---|---|
| Lump sum only | P × (1 + r/n)^(n × years) |
| Effective monthly rate | (1 + r/n)^(n/12) − 1, which is simply r ÷ 12 for monthly compounding |
| Monthly contributions | Add the contribution and grow the balance by the monthly rate, once per month |
| Simple-interest comparison | P × r × years + contribution × r/12 × (total months each contribution was invested) |
When you contribute monthly but interest compounds on a different schedule (say, yearly), the tool converts the rate to an equivalent monthly rate that produces the same effective annual yield. Real accounts sometimes pay simple interest on deposits made between compounding dates, so a bank’s figure can differ slightly.
Example
Start with 10,000, add 500 at the end of every month, and earn 7% compounded monthly for 20 years:
| Item | Amount |
|---|---|
| Total contributed | 130,000.00 |
| Final balance | 300,850.72 |
| Interest earned | 170,850.72 |
| Same plan with simple interest | 227,650.00 |
Compounding adds about 73,200 on top of what simple interest would pay — and the gap widens quickly with time.
Things to keep in mind
- APY vs. APR. US banks advertise APY, which already includes compounding. If you only know the APY, choose Yearly compounding and enter the APY as the rate; you’ll get the same result.
- Market investments don’t earn a fixed rate, so treat results for stocks or funds as a projection, not a promise.
- Taxes and inflation are not deducted. Interest is often taxable, depending on the account type and where you live.
- Borrowing instead of saving? The loan calculator shows payments and total interest.
FAQ
How much does compounding frequency matter?
At 5%, the effective annual yield is 5.000% compounded yearly, about 5.116% monthly and about 5.127% daily. More frequent compounding helps, but far less than a higher rate or a longer horizon.
How long does it take to double my money?
The rule of 72 gives a quick estimate: 72 ÷ the annual rate in percent. At 6% that’s about 12 years; the exact answer is about 11.9 years.
Does contribution timing make a difference?
Yes. Money added at the start of a month earns that month’s interest, so start-of-month contributions always end slightly higher.