How this calculator works
It compounds monthly, which matches how most people actually save: a starting lump sum grows at your annual rate, and each monthly contribution starts growing from the month it lands. The formula behind it is the standard future-value calculation used by regulator tools like the US SEC's own compound interest calculator.
- Starting amount — grows for the whole period.
- Monthly contribution — each payment compounds from when it's made, so earlier months matter more.
- Annual return — the make-or-break input. Long-run stock market averages are often quoted near 7–10% before inflation; cash savings rates are usually far lower.
- Years — the quiet giant. The curve bends upward, so the last decade earns more than the first.
Common questions
What rate of return should I use?
For long-term stock market investments, people commonly test 5–10% before inflation, since long-run equity averages have historically sat in that range. For a savings account, use the rate your bank actually pays. When unsure, run the calculator at a low and a high rate and treat the truth as somewhere between.
Does the calculator account for inflation?
No — results are in today's nominal terms. A rough way to see inflation-adjusted growth is to subtract expected inflation from your return: at 8% growth and 3% inflation, enter 5% to see the answer in today's buying power.
How often does it compound?
Monthly. Compounding frequency makes only a small difference compared with the rate and the number of years, but monthly matches how contributions and most accounts behave.
Is compound interest really that powerful?
Yes, given time. Because you earn returns on past returns, growth accelerates: the gap between simple and compound interest is small in year five and enormous by year thirty. That is also why starting early with small amounts often beats starting late with large ones.
This tool is educational and not financial advice. Projections assume a constant return, which real investments never deliver.
- 1.Compound Interest Calculator — US Securities and Exchange Commission — Investor.gov
- 2.Compound Interest (definition) — US Securities and Exchange Commission — Investor.gov