How to use the compound interest calculator
- Enter how much you are starting with. Use 0 if you are starting from nothing.
- Add how much you plan to save each month.
- Type the yearly interest rate and the number of years.
- Pick how often interest is added. Monthly is the most common for savings accounts.
- Open the year by year table to see how the balance builds up.
Example
Start with 10,000, add 200 every month and earn 6 percent a year, compounded monthly. After 10 years you would have put in 34,000 and have a balance of roughly 51,000. About 17,000 of that is interest. Leave the same plan running for 20 years and the interest grows to more than the money you deposited.
Three ways to make compound interest work harder
- Start early. Time matters more than anything. Ten extra years can double the final balance.
- Add a little every month. Regular deposits keep the snowball growing, even if the amounts are small.
- Leave the interest in. Withdrawing interest turns compound growth back into simple interest.
The formula
Without monthly deposits, the final amount is P × (1 + r/n)^(n × t), where P is the starting amount, r the yearly rate as a decimal, n how many times a year interest is added and t the number of years. With monthly deposits the calculator works month by month, which is the clearest way to include them.
This calculator is for planning and learning. Real returns on investments go up and down, and savings rates can change. For financial decisions, speak with a qualified adviser.