Compound Interest Calculator
Compound interest is interest that earns interest. Each period the balance grows by a percentage. The next period's growth is calculated on the larger balance. Over many years the effect is large.
Enter a starting amount, a monthly deposit, a yearly return and a number of years. The page starts with $10,000 and $150 a month for 18 years at 6.8 percent.
How the growth is worked out
There are two pieces to the final balance. One is the starting balance of $10,000 growing alone. The other is the stream of $150 deposits growing together. Both use the same monthly rate of 0.5667 percent over 216 months.
Worked example
Using the starting figures you would put in $42,400 in total. The balance grows to $97,129, so interest adds $54,729.
The same $10,000 with no monthly deposits would reach $33,890. The monthly deposits are responsible for the rest of the difference.
Questions about this calculator
What is compound interest?
It is interest calculated on both the original amount and on interest already earned. Growth speeds up over time because each period starts from a larger balance.
How often does the calculator compound?
Monthly. The yearly return is divided by twelve and applied to the balance once a month. Daily or yearly compounding would give slightly different results.
Can I use this for debt?
Yes, in a loose way. Debt that is not paid down also grows by compounding. Use the loan calculators on this site for exact payment figures.
Is it better to invest $10,000 at once or in monthly pieces?
For growth, at once. $10,000 invested at the start reaches $33,890 over 18 years at 6.8 percent. The same money split into 216 monthly deposits reaches $19,518. Monthly deposits fit a budget while a lump sum needs cash you already have.
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This page is for education only and is not financial or tax advice.