Compound Interest Calculator

Why compounding matters

Compound interest is interest earned on both your principal AND on previously accumulated interest. Over long periods this becomes exponential growth — the same $10,000 at 8% becomes $21,589 in 10 years, $46,610 in 20, and a whopping $217,245 in 40. Time matters more than the rate.

The formulas used here

For the lumpsum component:

FV_lumpsum = P × (1 + r/m)^(m×t)

For the monthly contribution component (annuity):

FV_monthly = M × ((1 + r/m)^(m×t) − 1) / (r/m)

• P = initial lumpsum, M = monthly contribution
• r = annual interest rate (decimal)
• m = compounding periods per year (12 for monthly)
• t = number of years
• FV = future value

Realistic rate to use

Long-term US stock market average ~10% nominal, ~7% inflation-adjusted. Bonds ~3-5%. Savings account ~1-4%. CDs ~3-5%. Use the real (inflation-adjusted) return if you want purchasing-power numbers — see our Inflation Calculator.