# Compound Interest Calculator

> Free compound interest calculator: enter your starting amount, monthly contribution, rate and years to see your future value and how much is growth vs contributions.

See how your money grows when returns earn returns. Enter a starting amount, a monthly contribution and an expected rate, and watch compounding do the heavy lifting.

*Interactive tool: enter your values at https://toollantern.win/compound-interest-calculator/ and results update instantly in your browser.*

## What this calculator does

This compound interest calculator projects how an investment grows when you start with a lump sum, add money every month, and reinvest all returns. It shows the future value alongside a breakdown of how much of that total came from your own contributions and how much came from compounding. The stacked bar visualises the split.

## How the math works

Interest compounds monthly at the monthly rate i = annual rate ÷ 12, over n = years × 12 periods:

- **Future value** = P × (1 + i)n + PMT × (((1 + i)n − 1) ÷ i), where P is the initial amount and PMT the monthly contribution.

- **Total contributions** = P + PMT × n.

- **Growth** = future value − total contributions.

## Worked example

You start with **$10,000**, add **$500 a month**, and earn **7% a year** for **30 years**. The future value is about **$691,000**. Your total contributions are 10,000 + 500 × 360 = **$190,000**. The remaining **$501,000** is pure compounding. More than two thirds of the final balance was earned by the money itself, not added by you.

## The rule of 72

A quick mental shortcut: divide 72 by your annual rate to estimate how many years it takes your money to double. At 7%, money doubles roughly every 10.3 years. That is why starting early matters more than starting big: an extra decade of compounding can outweigh years of larger contributions.

## Limitations

The projection assumes a constant rate with no fees, taxes, inflation or market swings, and monthly contributions made without fail. Real investing is bumpier. It also ignores the timing of contributions within the month. Use it to understand the shape of compounding, not as a prediction of any specific account.

## Frequently asked questions
### What is compound interest in simple terms?

Compound interest is interest earned on both your original money and the interest already earned. Each period, the base that earns interest gets bigger, so growth accelerates over time. It is the opposite of simple interest, which only pays on the original amount.

### How is compound interest calculated monthly?

Divide the annual rate by 12 to get the monthly rate, then apply it to the growing balance each month for years × 12 periods. This calculator uses the standard future-value formula with monthly compounding.

### What is the rule of 72?

Divide 72 by your annual interest rate to estimate the years needed to double your money. At 6%, doubling takes about 12 years; at 8%, about 9 years. It is an approximation, but a handy one.

### What annual return should I assume?

For long-term stock investing, 7% a year after inflation is a commonly cited historical average for the US market, though the future may differ. For a savings account, use the actual APY. Be conservative: a lower assumed rate gives a more useful plan.

### Does daily vs monthly compounding matter much?

Barely. More frequent compounding gives a slightly higher effective yield, but the difference between daily and monthly compounding is a fraction of a percent per year. The rate and the time horizon matter far more.

### Is my data sent anywhere?

No. The calculator runs entirely in your browser. Nothing you enter is uploaded or stored.

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Interactive version: https://toollantern.win/compound-interest-calculator/