Compound Interest Calculator
See how a lump sum plus regular contributions grows over time with compound interest.
What this calculator does
Projects how a starting lump sum plus regular monthly contributions grows over time under compound interest, showing how much of your final balance comes from your own contributions versus investment growth.
Who this is for
Anyone building a long-term savings or investment plan, comparing the effect of starting now versus waiting a few years, or wanting to see how much a modest monthly contribution can grow into given enough time.
How this calculator works
Interest is compounded monthly: each month your balance earns a return, then your contribution is added on top of the new, larger balance. Over long periods this compounding effect accounts for the majority of total growth, not the contributions themselves.
Worked example
$5,000 starting balance, $200/month contributions, at 7% annual return over 20 years: total contributions over 20 years = $5,000 + ($200 × 240 months) = $5,000 + $48,000 = $53,000. But the compounding effect on both the starting balance and each monthly contribution pushes the final total to roughly $126,000-$130,000 — meaning growth from compounding (not your own money) makes up more than half the final balance.
What this result means
The longer your money compounds, the more the growth curve accelerates — this is why starting early matters more than starting with a large amount. A modest sum invested young often outgrows a much larger sum invested a decade later, purely because compounding needs time to work.
Contributions vs. growth
Run the calculator above to see how much of your final balance came from contributions vs. compound growth.
Common mistakes
- Assuming a flat, guaranteed return. Real markets fluctuate year to year — this calculator models a smooth average return, not the actual sequence of ups and downs you'd experience.
- Not adjusting for inflation. A 7% nominal return is closer to a 4-5% real return after typical inflation — worth keeping in mind when planning against future costs.
- Underestimating how much starting early matters. Delaying contributions by even 5-10 years can cost more in lost compounding than contributing significantly more later can make up for.
- Stopping contributions during a market downturn. Pausing contributions when markets fall means missing out on buying at lower prices — a common behavioral mistake that hurts long-run compounding more than the downturn itself.
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Frequently Asked Questions
How much of my final balance comes from contributions vs. growth?
For long time horizons (15+ years), compound growth often exceeds total contributions — in a typical 20-year scenario at a 7% return, growth can account for more than half the final balance, even though every dollar of contribution was yours.
Is a 7% return realistic?
It's a commonly used long-run average for diversified stock market returns before inflation, but actual year-to-year returns vary significantly and aren't guaranteed. Treat this as a planning estimate, not a promise.
Does this account for inflation?
No, this shows nominal growth. To estimate real (inflation-adjusted) purchasing power, subtract roughly 2-3% from your assumed annual return.
Why does starting early matter so much?
Compounding is exponential, not linear — money invested earlier has more compounding periods to grow. A smaller amount invested a decade earlier can outgrow a larger amount invested later, purely from the extra time compounding.