Compound Interest Calculator
Forecast how your investments, savings accounts, and retirement portfolios grow over time with recurring deposits and compound interest.
After 10 years with 8% return
Annual Compounding Growth Schedule
Year-by-year accumulation of deposits, annual interest gains, and ending balances
| Year | Start Balance | Annual Deposits | Interest (Year) | Total Interest | Ending Balance |
|---|---|---|---|---|---|
| 1 | $10,000 | $2,400 | $936.58 | $936.58 | $13,336.58 |
| 2 | $13,336.58 | $2,400 | $1,213.51 | $2,150.09 | $16,950.09 |
| 3 | $16,950.09 | $2,400 | $1,513.43 | $3,663.53 | $20,863.53 |
| 4 | $20,863.53 | $2,400 | $1,838.25 | $5,501.78 | $25,101.78 |
| 5 | $25,101.78 | $2,400 | $2,190.02 | $7,691.80 | $29,691.80 |
| 6 | $29,691.80 | $2,400 | $2,570.99 | $10,262.79 | $34,662.79 |
| 7 | $34,662.79 | $2,400 | $2,983.58 | $13,246.37 | $40,046.37 |
| 8 | $40,046.37 | $2,400 | $3,430.41 | $16,676.78 | $45,876.78 |
| 9 | $45,876.78 | $2,400 | $3,914.34 | $20,591.12 | $52,191.12 |
| 10 | $52,191.12 | $2,400 | $4,438.42 | $25,029.54 | $59,029.54 |
The Mathematics of Compound Interest
Albert Einstein famously described compound interest as the "eighth wonder of the world," stating that those who understand it earn it, and those who do not pay it. In mathematical terms, compounding is the process where interest generates additional interest over successive time intervals.
Compound Interest Formula (Without Additional Deposits)
A = P × (1 + r ÷ n)^(n × t)Where:
- A = Final accrued balance (principal + interest)
- P = Initial principal investment amount
- r = Annual nominal interest rate (decimal: 8% = 0.08)
- n = Compounding frequency per year (12 for monthly)
- t = Total investment duration in years
Note: When regular monthly contributions are made, the future value of a series of periodic deposits is added to this base formula.
Simple Interest vs. Compound Interest
To appreciate why compounding is transformative for wealth creation, consider an initial $10,000 investment at an 8% annual return over 25 years:
- With Simple Interest: You earn $800 each year ($10,000 × 0.08). Over 25 years, you earn $20,000 in interest, resulting in a final total of $30,000.
- With Compound Interest (Monthly): Because the interest is reinvested every month, your total interest earned is $63,488, resulting in a final total of $73,488 — more than double the simple interest outcome!
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Frequently Asked Questions
Common questions and clear answers about this calculator