Compound interest means you earn returns on your past returns, not just on the money you put in. Add steady monthly contributions and the effect accelerates: in the later years, growth can outpace your deposits. This calculator shows exactly how much of your final balance comes from you and how much comes from compounding.
How this calculator works
Your starting amount grows at the monthly rate (annual return ÷ 12) for every month of the period.
Each monthly contribution also compounds from the month it is added. Early contributions have decades to grow; later ones have less time. The calculator adds all of them together using the future value of an annuity formula.
The year-by-year table separates what you contributed from the interest earned so you can see the point where growth starts doing the heavy lifting.
The formula
FV = P(1 + r)^n + C × ((1 + r)^n − 1) / r- FV
- future value
- P
- starting amount
- C
- monthly contribution
- r
- monthly rate = annual return ÷ 12
- n
- number of months
Worked example
Start with $10,000, add $500 a month and assume a 7% annual return for 25 years. The monthly rate is 0.5833% and there are 300 months.
The starting $10,000 grows to about $57,300. The contributions — $150,000 in total — grow to about $405,000. Together that is roughly $462,000.
You contributed $160,000, so about $302,000, or nearly two-thirds of the final balance, is compound growth. Cut the period to 15 years and the balance falls to roughly $187,000 — time is the biggest lever.
Tips
- Start early: a decade of extra compounding often matters more than a higher contribution later.
- Use tax-advantaged accounts such as a 401(k), IRA or HSA where you can.
- Use a conservative return estimate; the long-run US stock market average is often quoted near 10% nominal, roughly 7% after inflation, but returns vary widely year to year.
Frequently asked questions
How does compound interest work with monthly contributions?
Each contribution starts earning interest when it is deposited, and that interest itself earns interest in later months. The total is the growth of your starting balance plus the growth of every individual deposit.
What rate of return should I use?
For a diversified stock portfolio, many planners use 5%–7% to account for inflation. For a high-yield savings account, use its current APY. Lower assumptions give a more cautious plan.
What is the Rule of 72?
Divide 72 by your annual return to estimate how many years it takes money to double. At 7%, money roughly doubles every 10 years.
Does compounding frequency matter?
It matters a little. Daily versus monthly compounding changes results only slightly. The return rate, the contribution amount and the length of time matter far more.