Compound Interest Calculator
How compound interest works
Compound interest is interest that earns interest. Each period, the interest you’ve earned is added to your balance, and the next period’s interest is calculated on that larger balance. Over years and decades, that feedback loop turns modest, steady saving into surprisingly large sums — the reason the single most powerful variable in investing is time.
Here P is your initial investment, PMT your recurring contribution, r the annual rate, n the number of times it compounds per year, and t the years invested. The first term grows your starting balance; the second grows your stream of contributions. This calculator simulates the same math month by month so it can handle monthly contributions alongside any compounding frequency.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both your original money and on the interest it has already earned. Because each period’s interest is added to the balance before the next period’s interest is calculated, the balance grows faster and faster over time. The longer your money compounds and the more frequently interest is applied, the larger the effect. This is why starting early matters so much: the earliest dollars have the most time to compound.
How does compounding frequency affect my results?
Compounding frequency is how often earned interest is added to your balance — annually, semiannually, quarterly, monthly, or daily. More frequent compounding produces slightly more growth at the same stated rate, because interest starts earning interest sooner. The difference between annual and daily compounding at the same rate is real but usually modest; the interest rate and the length of time invested matter far more than the frequency.
What is the interest rate variance range?
The variance range lets you see a band of outcomes instead of a single guess. If you set an estimated rate of 6% with a variance of 2%, the calculator also projects results at 4% (low) and 8% (high). Since no one can predict investment returns exactly, this range gives a more honest picture: a plausible low, an expected middle, and a plausible high. The growth chart shades the area between the low and high projections.
Does this calculator account for taxes or inflation?
No. Like the investor.gov calculator it is modeled on, this is a plain compound-growth tool. It does not adjust for taxes, inflation, fees, or investment risk, and it assumes a steady rate of return, which real markets do not deliver. Use it to understand the mechanics and rough scale of compounding, not as a precise forecast. For tax-aware or inflation-adjusted retirement planning, treat the result as a gross, before-tax, before-inflation figure.
Can I model regular withdrawals instead of contributions?
Yes. Enter a negative number in the monthly contribution field to model money you plan to withdraw each month rather than add. The calculator will subtract that amount monthly while still compounding interest on the remaining balance, which is useful for seeing how long a balance lasts under steady withdrawals. If withdrawals outpace growth, the projected balance will decline over time.
This calculator is for educational purposes and assumes a constant rate of return. Actual investment returns vary and are not guaranteed. It does not account for taxes, inflation, or fees, and is not financial advice. Modeled on the U.S. SEC’s investor.gov compound interest calculator.