How is compound interest calculated?

Each compounding period, interest is applied to the current balance (including prior interest). With periodic contributions, each deposit is added at the end of a period and begins compounding from the next period forward.

What rate of return should I assume?

Historical U.S. equity returns have averaged roughly 7–10% nominally before inflation, but future returns vary. Many long-term planners use 6–8% for diversified stock portfolios and lower rates for bonds or cash.

Does contribution frequency matter?

Yes. More frequent contributions (e.g. monthly) typically increase ending wealth versus a single annual deposit because more money is invested earlier and has longer to compound.

What is the difference between compound interest and simple interest?

Simple interest is calculated only on the principal. Compound interest is calculated on principal plus accumulated interest, which accelerates growth over time.

Analysis

Compound interest calculator

See how principal and recurring contributions grow with compounding — with a visual breakdown of interest vs money contributed.

Compound interest

Growth over time

Model how principal and recurring contributions grow with compounding.

Future value

$144.57K

2.49× total contributed

Starting principal

Annual return

Time horizon

yrs

CompoundingContribution (monthly)

Total contributed

$58.00K

Interest earned

$86.57K

Ending balance

$144.57K

Growth breakdown

Stacked view of money contributed vs interest earned over time

YearBalanceContributionsInterestCumulative

1$13.20K$2.40K$801.42$13.20K

2$16.63K$2.40K$1.03K$16.63K

3$20.32K$2.40K$1.28K$20.32K

4$24.26K$2.40K$1.55K$24.26K

5$28.49K$2.40K$1.83K$28.49K

6$33.03K$2.40K$2.14K$33.03K

7$37.90K$2.40K$2.47K$37.90K

8$43.12K$2.40K$2.82K$43.12K

9$48.71K$2.40K$3.20K$48.71K

10$54.71K$2.40K$3.60K$54.71K

11$61.15K$2.40K$4.03K$61.15K

12$68.05K$2.40K$4.50K$68.05K

13$75.44K$2.40K$5.00K$75.44K

14$83.38K$2.40K$5.53K$83.38K

15$91.88K$2.40K$6.11K$91.88K

16$101.00K$2.40K$6.72K$101.00K

17$110.78K$2.40K$7.38K$110.78K

18$121.27K$2.40K$8.09K$121.27K

19$132.51K$2.40K$8.85K$132.51K

20$144.57K$2.40K$9.66K$144.57K

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Frequently asked questions

How is compound interest calculated?: Each compounding period, interest is applied to the current balance (including prior interest). With periodic contributions, each deposit is added at the end of a period and begins compounding from the next period forward.
What rate of return should I assume?: Historical U.S. equity returns have averaged roughly 7–10% nominally before inflation, but future returns vary. Many long-term planners use 6–8% for diversified stock portfolios and lower rates for bonds or cash.
Does contribution frequency matter?: Yes. More frequent contributions (e.g. monthly) typically increase ending wealth versus a single annual deposit because more money is invested earlier and has longer to compound.
What is the difference between compound interest and simple interest?: Simple interest is calculated only on the principal. Compound interest is calculated on principal plus accumulated interest, which accelerates growth over time.

How to use this compound interest calculator

Compound interest is interest earned on both your original principal and on interest that has already accumulated. Over long horizons, compounding dominates outcomes — especially when you add regular contributions.

Enter a starting balance, expected annual return, time horizon, compounding frequency, and optional periodic contributions. The calculator shows your ending balance, total contributed, total interest earned, and a stacked chart that separates contributions from interest over time.

This tool is useful for modeling index-fund savings, retirement contributions, or any portfolio where reinvestment drives long-term growth. It complements StockSpill’s stock-level DCF work by answering the personal finance question: how much could disciplined investing grow over 10, 20, or 30 years?

Key takeaways

Supports annual, quarterly, monthly, and daily compounding.
Recurring contributions added at each compounding period.
Stacked chart shows contributed principal vs interest earned over time.

Compound interest calculator with contributions chart