Compound Interest Calculator
Calculate compound interest effects and total returns over time.
Compound Interest Calculator
A tool that applies compound interest—where earnings generate further earnings—to calculate future assets or investment returns.
How to use
Enter the initial investment, monthly contribution, investment duration, price return, dividend yield, and compounding frequency, then select ‘Calculate Investment Result.’ Review the final balance and cumulative earnings, followed by the period-by-period chart and table.
What is compound interest?
Compound growth adds each period's earnings to the principal, then applies the next period's return to the larger balance. Unlike simple interest, which applies a constant return only to principal, the cumulative effect increases over longer periods.
Future Balance calculation assumptions
For monthly compounding, the effective annual return R is converted with q = (1 + R)^(1/12) and applied each month.
Each monthly contribution is added at the end of the month, after that month's return has been applied.
Annual price return and dividend yield are added to form the effective annual return, and dividends are fully reinvested at the selected compounding frequency.
Why do monthly and annual compounding differ?
With only an initial investment and a whole number of years, both methods end at the same amount. Monthly contributions can differ because each deposit has a different holding period and return timing.
With an initial investment of 10,000, monthly contributions of 500, a 9% annual return, and a one-year duration, the projected final balance is about 17,143.65 with monthly compounding and 16,900 with annual compounding.
What the calculation excludes
Taxes, trading fees, inflation, changing returns, and the sequence of gains and losses are not included. This is a simulation that assumes the entered return continues, not a forecast or guarantee of investment performance.
Ways to use the result
Use the calculator to explore the long-term effect of recurring investments or compare projected outcomes for different contribution amounts and durations. Trying conservative, baseline, and optimistic return assumptions can help illustrate a range of possible results.