Estimate future value and interest earned from principal, rate, time, and compounding frequency.
The math behind every result, in plain English.
Compound interest adds earned interest back into the balance, so the next period’s interest is calculated on a slightly larger amount. The more often that addition happens - yearly, monthly, daily - the more the balance grows.
The rate quoted by a bank is usually the nominal annual rate (APR). The rate you actually earn over a year - after the compounding kicks in - is the APY. For 5% compounded monthly, APY ~= 5.116%. Always compare savings accounts on APY, not APR.
Adjust the sliders below to see how compounding pulls ahead of simple interest over 10 years.
Sanity-check your inputs against these realistic scenarios.
The ones we get asked most.
APR is the simple annual rate. APY (or AER) factors in compounding, so it is the rate you actually earn or pay across a year. For a 5% nominal rate compounded monthly, the APY is roughly 5.12%.
More frequent compounding produces a slightly higher future value for the same nominal rate, but the difference shrinks past daily compounding. Always compare rates using APY, not nominal rate.
Yes. You can enter an expected inflation rate in the advanced options to see your real (inflation-adjusted) future value. You can also select a tax treatment (tax-free, taxable, or tax-deferred) and enter your marginal tax rate to see the after-tax result.
Yes. Add a monthly or yearly contribution. The formula extends with the future value of an annuity term: PMT · ((1 + r/n)^(nt) - 1) / (r/n). You can also choose the contribution frequency (weekly, bi-weekly, monthly, etc.) in the advanced options.
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. For example, at 6%, your money doubles in roughly 12 years (72 ÷ 6 = 12). This calculator shows the exact doubling time alongside the Rule of 72 estimate.
Simple interest is calculated only on the original principal: Interest = P × r × t. Compound interest is calculated on the principal plus any previously earned interest, so your balance grows exponentially. Over long periods, compound interest generates dramatically more wealth.
More frequent compounding means interest is added to your balance sooner, so each subsequent interest calculation is on a slightly larger amount. Moving from annual to monthly compounding on a $10,000 deposit at 5% for 10 years adds about $83 extra. The jump from daily to continuous compounding adds only a few cents.
Start of period (annuity due) always produces a slightly higher result because each contribution earns interest for the full period. The difference compounds over time. If you have the choice, contributing at the start is mathematically optimal.
Use the Reach a Goal mode: set your target to $1,000,000, enter your expected rate and time horizon, then let the calculator solve for the required monthly contribution. For example, at 7% over 30 years starting from $0, you'd need roughly $820/month.
The Annual increase % option in advanced settings models contribution step-ups. A 3% annual increase dramatically improves outcomes because you're contributing more as your salary grows — for example, it can add 30-50% more to your final balance over a 20-year horizon.
Use the FV function: =FV(rate/n, n*t, -contribution, -principal, type) where rate is the annual rate, n is compounding periods per year, t is years, and type is 0 (end) or 1 (beginning). For example: =FV(0.05/12, 12*10, -200, -10000, 0) for $10K at 5% with $200/mo for 10 years.
This calculator is designed for savings and investments (growing money). For loans and mortgages, you'd typically need an amortization calculator that models principal paydown. However, the underlying math is identical — compound interest works for both lending and saving.
Continuous compounding assumes interest is added to your balance infinitely often — every instant. It uses the formula A = Pe^(rt). In practice, the difference between daily and continuous compounding is negligible, but it represents the theoretical maximum growth rate for a given nominal rate.
Inflation erodes purchasing power over time. A nominal return of 7% with 3% inflation gives you a real return of about 4%. Our calculator shows both nominal and inflation-adjusted values so you can see what your future balance is actually worth in today's dollars.
Key financial terms defined.
The initial sum of money deposited or invested before any interest is earned or contributions are made.
The nominal annual rate of interest, not accounting for compounding. Also known as Annual Percentage Rate.
The effective annual rate of return, taking into account the effect of compounding interest over the year.
How often interest is calculated and added to the principal balance (e.g., daily, monthly, quarterly, annually, or continuously).
Interest calculated only as a percentage of the original principal amount: Interest = Principal × Rate × Time.
Interest calculated on the initial principal and also on the accumulated interest of previous periods, leading to exponential growth.
A series of equal payments made at regular intervals. In this calculator, your periodic contributions form an annuity.
Whether contributions are deposited at the start or end of each period, affecting how long each contribution compounds.
The rate at which the general level of prices for goods and services is rising, eroding the purchasing power of money.
The annual percentage return on an investment adjusted for inflation (purchasing power change).
Investment growth where taxes on interest and earnings are postponed until the funds are withdrawn (e.g., traditional IRA or 401(k)).
A quick formula to estimate the number of years required to double an investment: Years to Double ≈ 72 / Interest Rate.
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