Compound Interest Calculator
Project investment growth and compound interest with customizable compounding frequencies and optional regular monthly contributions.
Last verified: September 2026Inputs & Parameters
Calculation Results
Mathematical growth model based on constant compound interest.
Annual Growth Schedule
| Year | Start Balance | Deposits | Interest | Ending Balance |
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The Mathematics of Compound Interest & Wealth Accumulation
Compound interest represents interest earned not only on the initial principal deposit, but also on the cumulative interest accumulated during previous compounding intervals. Over extended investment horizons, compounding causes asset balances to grow exponentially rather than linearly.
The Universal Compound Interest Formula
A = P × (1 + r / n)^(n × t) + PMT × [ ((1 + r / n)^(n × t) - 1) / (r / n) ]
Where A = Final Future Value, P = Initial Principal, r = Nominal Annual Interest Rate (decimal), n = Compounding frequency per year, t = Investment duration in years, and PMT = Periodic monthly deposit.
Impact of Compounding Frequency
The more frequently interest is calculated and credited to the principal balance, the faster wealth accumulates. Comparing annual, quarterly, monthly, and daily compounding highlights how compounding frequency elevates the effective annual percentage yield (APY) above the nominal stated interest rate.
Worked Example
Investing an initial $10,000.00 with a recurring $200.00 monthly contribution at 7.00% annual interest compounded monthly over 10 years:
1. Total Principal Invested = $10,000 + ($200 × 120 months) = $34,000.00
2. Future Portfolio Balance = $54,697.55
3. Total Compound Interest Earned = $54,697.55 - $34,000.00 = $20,697.55
4. Interest constitutes over 37% of the final portfolio balance.
Assumptions & Limitations
This calculator assumes a constant annual rate of return throughout the duration and reinvestment of all earnings without periodic withdrawals. Real-world investment portfolios experience market volatility, asset fluctuations, management expense fees, and capital gains taxes.