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How to use
This compound interest calculator projects the growth of a starting balance with selectable compounding frequency and optional monthly contributions. More frequent compounding can change the effective annual rate even when the nominal annual rate stays the same. Monthly contributions are added progressively, so later contributions have less time to compound than earlier ones.
- Enter the starting principal, annual rate and term in years.
- Choose annual, semiannual, quarterly, monthly or daily compounding.
- Optionally enter a monthly contribution and choose whether it is added at the beginning or end of each month.
- Choose a currency for display only, then review future balance, total contributed, growth earned and effective annual rate.
How it is calculated
Example
Example: a starting balance of 10,000 at a nominal 5% annual rate, compounded monthly for 10 years with a 100 contribution at the end of each month, grows to about 31,998.32. Total contributions are 22,000, so modeled growth is about 9,998.32. The effective annual rate for monthly compounding at a 5% nominal rate is about 5.1162%.
Important notes
The result is a mathematical projection assuming a constant rate for the full term. Fees, taxes, inflation and market changes are excluded, and the result is not a promise of return. When compounding is not monthly, the calculator derives an equivalent monthly growth rate from the selected annual compounding convention so monthly contributions can be modeled consistently.
Worked examples and interpreting results
A hypothetical 1000 principal at 10% annually, compounded yearly with no contributions, reaches 1210 after two years. The second year includes growth on the first year’s interest.
| Case | Calculation | Result |
|---|---|---|
| Future value | 1000 × 1.1² | 1,210 |
| Accumulated growth | 1210 − 1000 | 210 |
How to check the result
Select yearly compounding and zero monthly contributions. The fixed rate is an assumption, not a guaranteed return; inflation, taxes and investment fees are not deducted.
Frequently asked questions
How does compound interest differ from simple interest?
Simple interest is calculated only on the original principal, while compound interest adds prior interest to the balance used for future interest calculations.
What does compounding frequency mean?
It is how often interest is credited to the balance during a year. More frequent compounding can increase the effective return when the nominal rate is unchanged.
What is the difference between nominal and effective annual rate?
The nominal rate is the stated rate before compounding frequency is reflected; the effective annual rate includes that compounding effect.
Can I add monthly contributions?
Yes. Enter the monthly amount and choose whether it is added at the beginning or end of each month.
Why does beginning-of-month contribution produce a higher result?
Each contribution receives one additional month of growth compared with an end-of-month contribution.
Is the projected return guaranteed?
No. It is a fixed-rate mathematical projection and does not predict actual investment performance.