Compound interest calculator
See how savings grow: an initial amount, monthly or yearly deposits, interest added yearly, monthly or daily, a year-by-year table and inflation.
How to use
Enter the amount you start with, the deposit you add every month or every year, the annual interest rate and the number of years. The result shows the final balance, how much of it you paid in and how much is interest, and a table with the balance at the end of each year. It updates as you type.
How often interest is added changes the effective annual rate: 5% added monthly is 5.12% a year, and added daily 5.13%. Each month the balance grows at the monthly rate equivalent to that effective rate, and then that month’s deposit is added, so a deposit starts earning the following month. Yearly deposits are added at the end of each year.
Inflation is optional. With it, the final balance is also shown in today’s money: divided by 1 plus the inflation rate once for every year. Tax on interest, account fees and future changes in the rate are not included, so treat the result as an estimate and compare it with the figures your bank gives you.
Example
The example: 5,000 to start and 100 a month for 10 years at 4%, with interest added once a year, grow to 22,070.81: 17,000 deposited and 5,070.81 of interest.
1,000 at 6% a year, interest added once a year, for 12 years2,012.20: the money doubles in about 12 years, as the rule of 72 predicts (72 ÷ 6 = 12).10,000 at 5% for 1 year, interest added monthly or daily10,511.62 with monthly interest and 10,512.67 with daily interest: effective rates of 5.12% and 5.13%.100 a month for 30 years at 5%, interest added monthly83,225.86, of which 36,000 are deposits and 47,225.86 is interest.10,000 at 5% for 10 years, interest added once a year, 2% inflation16,288.95, worth 13,362.61 in today’s money.
Frequently asked questions
What is compound interest?
Interest earned on earlier interest as well as on the money you put in. In the first year 1,000 at 6% earns 60; in the second the 6% applies to 1,060 and earns 63.60. Over decades that interest on interest becomes the larger part of the balance.
Why does daily compounding give more?
Because each day’s interest starts earning straight away. The difference is small: at 5%, the effective rate is 5.12% a year when interest is added monthly and 5.13% when it is added daily. Savings offers often quote the effective rate already (APY in the United States, AER in the United Kingdom); if so, enter it with interest added once a year.
Are the deposits made at the start or the end of the month?
At the end, the cautious assumption: each deposit starts earning the following month. Paid at the start of the month instead, every deposit would earn one more month of interest.
What does “in today’s money” mean?
What the final balance would buy at today’s prices if prices rise by the inflation you entered every year. 16,288.95 in 10 years with 2% inflation buys what 13,362.61 buys today.
Does it include tax?
No. Tax on interest depends on the country and the account, and when it is paid every year it slows the growth. Account fees are not included either.