How to use this calculator
Enter your starting balance, the annual interest rate (or expected return), how many years you’ll leave the money invested, and how often interest compounds. Add a regular monthly or yearly contribution if you plan to keep saving. The result shows your final balance, how much of it you contributed, how much came from interest, and the effective APY. The chart plots your balance against your contributions year by year — the widening gap is compound growth at work.
The formula
For a lump sum with no contributions:
A = P × (1 + r/n)^(n × t)- P — starting principal
- r — annual rate as a decimal
- n — compounding periods per year
- t — years
With regular contributions the calculator simulates each period: apply interest, then add the contribution. That handles any combination of compounding and contribution frequencies accurately rather than approximating with a closed formula.
Worked example
Start with $10,000, add $200 a month, earn 7% compounded monthly for 20 years:
| Amount | |
|---|---|
| Contributed | $58,000 |
| Interest earned | $84,860 |
| Final balance | $142,860 |
More than half the final balance is growth, not money you put in. Run the same numbers over 30 years and the balance is roughly $320,000 — the last decade adds more than the first two combined. That’s why starting early matters more than starting big.
The rule of 72
For a quick mental estimate, divide 72 by the annual rate to get the years it takes money to double. At 7%, that’s about 10 years; at 4%, about 18 years. The calculator gives the exact figure, but the rule is handy for sanity-checking.
Choosing a realistic rate
- High-yield savings / CDs: 3.5–5% in 2026, fully compounding, essentially risk-free.
- Bonds: 4–6% depending on duration and credit quality.
- Diversified stock index funds: about 7% real (10% nominal) per year on average historically, but with large swings year to year.
For investments, remember that the rate is an average, not a guarantee, and that inflation (historically ~3%) erodes purchasing power. Entering a real (inflation-adjusted) rate shows what your money will actually buy.
Frequently asked questions
What is compound interest?
Interest earned on both your original deposit and the interest already added to it. Because each period's interest is calculated on a bigger balance, growth accelerates over time.
What's the difference between APR and APY?
APR is the simple annual rate. APY (annual percentage yield) includes the effect of compounding within the year, so it's the true annual growth rate. 5% APR compounded monthly is 5.116% APY.
Does compounding frequency matter much?
Less than people expect. At 5%, daily compounding yields 5.127% versus 5.116% monthly and 5.000% annually. The rate and the time horizon matter far more than the frequency.
Are contributions added at the start or end of each period?
At the end, which is the common convention for savings calculators. Contributing at the start would earn slightly more.
Last updated August 26, 2026.