Home / Calculators / Compound interest calculator
Compound interest calculator
Your balance after any number of years, with monthly contributions and the interest split out.
Putting $500 a month on top of $10,000 at 7% a year, compounded monthly, gives $300,851 after 20 years. You put in $130,000; the other $170,851 is interest.
Your balance
$300,851
You put in $130,000; interest adds $170,851.
At 7% a year, compounded monthly. Before taxes, fees and inflation.
| Year | Money put in | Interest earned | Balance |
|---|---|---|---|
| 0 | $10,000 | $0 | $10,000 |
| 5 | $40,000 | $9,973 | $49,973 |
| 10 | $70,000 | $36,639 | $106,639 |
| 15 | $100,000 | $86,971 | $186,971 |
| 20 | $130,000 | $170,851 | $300,851 |
The formula
Balance = P × (1 + r/n)n·t + C × [(1 + r/n)n·t − 1] ÷ (r/n)
P is the starting amount, C the contribution each period, r the yearly rate, n the number of compounding periods a year and t the years. With monthly compounding, $10,000 at 7% for 10 years grows to $20,097; with yearly compounding it grows to $19,672. The difference comes from interest earning interest twelve times a year instead of once.
How much time adds
$500 a month at 7% a year, compounded monthly, from nothing:
| Years | Money put in | Balance | Interest |
|---|---|---|---|
| 10 | $60,000 | $86,542 | $26,542 |
| 20 | $120,000 | $260,463 | $140,463 |
| 30 | $180,000 | $609,985 | $429,985 |
| 40 | $240,000 | $1,312,407 | $1,072,407 |
Doubling the time from 20 to 40 years doubles the money put in and multiplies the balance by 5.0. That gap is why an early start matters more than a high contribution later.
Before or after inflation
The calculator works in the rate you type. A 7% return with 3% inflation is 3.88% after inflation, and at that rate $500 a month for 30 years is worth $339,908 in today's dollars, against $609,985 in future dollars. The inflation calculator shows how much prices have changed in the past.
Questions people ask
What is compound interest in simple terms?
Interest that is added to your balance and then earns interest itself. $1,000 at 10% a year becomes $1,100 after one year and $1,210 after two: the second year pays interest on the first year's $100 too.
What is the compound interest formula?
Without contributions, the balance is P × (1 + r/n)n·t. For $10,000 at 5% compounded yearly for 10 years that is $10,000 × 1.0510 = $16,289.
How much compound interest on 1 million dollars?
At 5% a year compounded monthly, $1,000,000 earns about $51,162 in the first year and grows to $1,647,009 in 10 years if nothing is taken out. The rate is an example, not a forecast.
Related
The rule of 72 calculator gives a quick estimate of how long money takes to double. The FIRE calculator uses the same growth to find the age your savings could pay for your spending.
Sources
- U.S. Bureau of Labor Statistics, Consumer Price Index.
Last reviewed by Asier Fernández, editor, on . Educational information only, not financial advice. How we calculate