Compound Interest Calculator
Small monthly contributions grow surprisingly fast when returns compound over decades. This calculator shows your future balance, how much you contributed, and how much of it is pure interest.
How this calculator works
Interest compounds monthly on your balance: each month you earn one-twelfth of the annual rate on everything accumulated so far, including past interest, and your monthly contribution is added on top. The longer the horizon and the higher the rate, the more of your final balance comes from interest rather than contributions — the core reason to start investing early.
Frequently asked questions
What rate should I use?
A reasonable long-run assumption for a diversified stock portfolio is about 7% after inflation; average historical returns are higher but come with volatility. Cash and bonds earn far less. Try 5%, 7%, and 9% to see how sensitive your goal is to the return assumption.
Does compounding frequency matter?
Monthly compounding (used here) versus annual compounding differs by only a few tenths of a percent annually. What matters far more is your contribution amount, the return rate, and time in the market.
Is compound interest taxed?
In a taxable brokerage account, yes — dividends and realized gains are taxed each year, which lowers your effective return. Inside a 401(k) or IRA, growth compounds tax-deferred or tax-free, which is why retirement accounts are such powerful tools.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.