Compound interest means you earn interest on your interest. This calculator shows how strong that effect can be over time. Enter your starting amount, the yearly interest rate and the number of years. Choose how often the interest is added: daily, monthly, quarterly, twice a year or once a year.
If you plan to add money regularly, type the monthly deposit in the optional box and say whether you pay it in at the start or the end of each month. Paying at the start gives each deposit one extra month of growth.
Press Calculate to see the final balance, the total you deposited, the interest earned and the effective yearly rate. The effective rate is the true yearly growth after compounding, and it is always a little higher than the quoted rate when interest is added more than once a year. The table below the results shows the balance at the end of every year, so you can watch the growth speed up in the later years.
Try the same numbers with a few more years. The extra time usually makes more difference than a small change in the rate.
The calculator first finds an equal monthly growth rate that matches your chosen compounding: monthly rate = (1 + rate / m) raised to m/12, minus 1, where m is the number of times per year the interest is added.
Then it goes month by month. For deposits at the end of the month: new balance = old balance x (1 + monthly rate) + deposit. For deposits at the start: new balance = (old balance + deposit) x (1 + monthly rate). The effective yearly rate is (1 + rate / m) raised to m, minus 1. Interest earned is the final balance minus everything you put in.