Compound Interest Calculator
Compounding is how a portfolio grows when returns pile on top of earlier returns. This calculator projects how an initial amount plus regular monthly contributions can grow over time, assuming monthly compounding at a hypothetical annual return. Enter your numbers below to see the estimated future value, how much you contributed, and how much of the total came from growth. Everything runs in your browser; nothing you type is sent anywhere.
How the Compound Interest Calculator Works
Compounding means earning returns on your returns. Each period, any gains are added to your balance, and the next period's return is calculated on that larger balance — so growth builds on itself rather than staying flat. This calculator assumes monthly compounding and a constant hypothetical annual rate: it splits your yearly return into twelve monthly steps, applies it to your running balance, and adds your monthly contribution along the way. Because the rate is held steady, the projection is a smooth curve rather than the jagged path a real portfolio follows. Steadily investing a fixed amount every month, regardless of price, is a strategy called dollar-cost averaging, and it maps directly onto the monthly contribution field above.
Why Compounding Matters
Time is the single biggest lever in long-term investing. Because each year's growth feeds the next, the effect starts slowly and then accelerates — the later years of a long horizon often add far more than the early ones. That is why small, regular contributions can grow into a large balance over decades, even when the amounts feel modest month to month. Consistency tends to matter more than trying to pick the perfect moment to invest. Many long-term investors pair steady contributions with broad index funds, a common low-cost vehicle for capturing overall market growth without betting on individual stocks. Try lengthening the years in the calculator above to see how the same monthly amount can produce very different outcomes over 10, 20, or 30 years.
The Assumptions to Keep in Mind
Real markets do not deliver a smooth, fixed return. Some years are strongly positive, others are negative, and the order in which those years arrive can meaningfully change your result. This calculator holds the rate constant, so its output is illustrative rather than a prediction — a way to compare scenarios, not a forecast of what you will actually earn. Two other forces reduce your real-world results: inflation erodes the purchasing power of a future balance, and taxes can take a share of gains in a standard account. For a more conservative view, try an after-inflation rate such as 7% instead of a nominal 10%. The goal is to understand the shape of compounding, not to guarantee any particular number.
Frequently Asked Questions
Compound interest means you earn returns not just on your original investment but also on the returns it has already generated. Over time, that snowball effect can make a portfolio grow far faster than simple interest. The longer your money stays invested and the more regularly you contribute, the more powerful compounding becomes.
Over the long run, the broad US stock market has historically averaged roughly 10% per year before inflation, or closer to 7% after inflation. However, returns vary enormously from year to year, some years are negative, and past performance never guarantees future results. Use a conservative rate and treat any projection as illustrative, not a promise.
Both work, and this calculator lets you combine them. Investing a lump sum puts more money to work sooner, which historically has often come out ahead. Contributing monthly, known as dollar-cost averaging, is easier to do from a paycheck and removes the pressure of timing the market. The best approach is the one you can stick with consistently.
Practice Investing Risk-Free
Download CustomStocks free from the App Store to practice with virtual money and real market prices. Build a long-term portfolio and watch it grow — no real money and no account required. Android coming soon.
