Compound Interest Calculator

Intro

Use this compound interest calculator to estimate how savings or investments may grow over time. You can model a single starting investment, add regular deposits, include planned withdrawals, change how often interest compounds, and test annual increases to your contributions.

The result is designed for scenario planning. It shows the future balance, estimated interest, net contributions, effective annual rate, and a yearly breakdown so you can see how the balance builds.

What you can calculate

This calculator supports more than a simple starting balance and annual rate. Use it for questions such as:

• How much could a lump sum become after a chosen number of years and months?
• What difference would weekly, monthly, quarterly, or yearly deposits make?
• How does daily, monthly, quarterly, or annual compounding change the result?
• What happens if deposits increase each year?
• How much could regular withdrawals reduce the final balance?
• What effective annual rate does the selected compounding frequency create?

For goal-based saving, use the Savings Goal Calculator. For borrowing costs, compare the opposite side of compounding with the Loan Repayment Calculator or Mortgage Calculator.

Inputs explained

If you choose Custom for compounding, the custom compounds-per-year field is used. Otherwise, the calculator uses the frequency selected in the compound frequency menu.

How the calculation works

The calculator first converts the entered rate into an effective annual rate using the selected compounding frequency:

Effective annual rate = (1 + r / n)^n - 1

In this formula, r is the nominal annual rate as a decimal and n is the number of compounding periods per year.

The calculator then projects the balance month by month. Regular deposits and withdrawals are converted into monthly equivalents from their selected frequencies, adjusted for any annual increase, and applied either at the beginning or end of the projection period.

This monthly projection makes it possible to combine daily compounding with monthly deposits, quarterly withdrawals, or other mixed scenarios in one simple tool.

Example calculation

Suppose you start with 5,000, earn 5% annual interest, compound monthly, and deposit 100 every month for 5 years.

Your own deposits add up to 6,000 over the term, before interest. The calculator then estimates the future balance after interest has been added through the projection, and separates the final value into starting balance, regular deposits, withdrawals, and estimated growth.

Try changing the deposit timing from end to beginning to see the small advantage of giving each contribution more time to earn interest. Then try annual deposit increases to model a savings plan that grows with income.

Compounding frequency and APY

The stated interest rate and the effective annual rate are not always the same. A 5% nominal annual rate compounded monthly produces a slightly higher effective annual rate because interest is added during the year and can itself earn interest.

The result panel shows the effective annual rate so you can compare scenarios more fairly. This is especially useful when comparing accounts or investments that quote similar headline rates but compound at different intervals.

Deposits, withdrawals, and timing

Regular deposits can make the biggest difference over long periods because each added amount has time to earn interest. Regular withdrawals work in the opposite direction: they reduce the balance available to compound.

Timing also matters. Contributions made at the beginning of a period start earning sooner than contributions made at the end. For most everyday savings scenarios the difference is modest, but it becomes more noticeable over longer terms or larger contribution amounts.

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Assumptions and limitations

• The rate is assumed to remain constant for the whole term.
• The projection uses monthly periods, even when the selected compounding frequency is daily or yearly.
• Weekly and bi-weekly deposits are converted into monthly equivalents.
• Taxes, account fees, inflation, platform charges, and changing investment returns are not included.
• Withdrawals are capped at the available projected balance.
• The result is an educational estimate, not financial advice.

FAQs

• What is compound interest? Compound interest means interest is added to the balance, so later interest can be earned on both the original money and earlier interest.
• Does compounding frequency matter? Yes. More frequent compounding can increase the effective annual rate, though the difference may be small at modest rates.
• Can I include deposits and withdrawals together? Yes. Choose deposits and withdrawals in the regular contributions field, then enter both amounts and frequencies.
• Why does contribution timing change the result? Money added at the beginning of a period has more time to earn interest than money added at the end.
• Can I use this for investments? Yes, as a simplified projection. Real investment returns vary and can be negative.