Compound Interest Calculator with Monthly Contributions

#The compound interest formula

For a single deposit the formula is:

A = P × (1 + r ÷ n)^(n × t)

where P is the starting amount, r the yearly rate, n how many times a year interest is added, and t the number of years. With monthly contributions, each deposit compounds for the time it remains invested. The calculator does this month by month, so you can mix any compounding frequency with monthly saving.

Example: $10,000 plus $500 a month at 7% for 20 years grows to about $300,000. You put in $130,000; the rest — about $170,000 — is interest earned on interest.

#Why time matters more than rate

Starting ten years earlier usually beats finding a slightly higher return. At 7%, money doubles about every 10 years (the Rule of 72: 72 ÷ 7 ≈ 10.3). That means a dollar invested at 25 can double four times by 65, while a dollar invested at 35 doubles only three times — half as much.

Tip: In the US, tax-advantaged accounts let more of your money compound. See the 2026 401(k) and IRA limits and whether a Roth or traditional IRA fits you.

#Compounding frequency

More frequent compounding helps a little, but much less than people expect. At 6%, yearly compounding gives a 6.00% effective yield, monthly gives 6.17%, and daily gives 6.18%. Compare savings accounts and CDs by their APY (annual percentage yield), which already includes compounding.

#What the calculator leaves out

• Inflation: to see buying power, subtract expected inflation from the rate (for example, 7% − 3% = 4% "real" return).
• Taxes and fees: interest in a normal savings account or FD is taxable every year; fund fees reduce returns.
• Volatility: stock returns are not smooth. The average holds over long periods, not every year.

#Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is paid only on the original amount. Compound interest is also paid on interest already earned, so the balance grows faster every year.

How long does it take to double money at 8%?

About 9 years, using the Rule of 72 (72 ÷ 8 = 9).

Is daily compounding better than monthly?

Only slightly. On a 5% rate, the difference between daily and monthly compounding is less than 0.01 percentage points a year.

Can I use this for a fixed deposit in India?

Yes. Choose INR, set monthly contribution to zero, and pick quarterly compounding, which most Indian banks use for FDs. Remember FD interest is taxed at your slab rate.

#Sources

• Investor.gov (SEC) — Compound interest calculator and explainer
• FDIC — Understanding APY