Compound Interest Calculator
Simulate how an investment grows over time with monthly contributions. Enter the initial amount, the monthly contribution, the interest rate and the term in months.
- Total invested
- $25,000.00
- Total interest
- $17,645.23
- Effective monthly rate
- 0.80%
How the Compound Interest Calculator works
Compound interest is interest earned not only on the initial principal but also on the interest accumulated in previous periods. This 'interest on interest' effect is what drives the exponential growth of investments over the long term. This calculator factors in an initial amount plus constant monthly contributions, compounding the balance month by month.
Each month the balance is multiplied by (1 + i), where i is the monthly interest rate, and then the contribution for that period is added. When you enter an annual rate, it is converted to the equivalent monthly rate using compound interest rather than a simple division by 12. The result shows the final balance, the total actually invested and how much of that balance came from interest.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is always calculated on the initial amount. Compound interest is calculated on the accumulated balance, including interest already earned, producing exponential growth.
How does the monthly contribution affect the result?
Each contribution starts earning interest from the month it is made. Regular contributions significantly increase the final balance, especially over long terms.
Is the annual rate just divided by 12?
No. The annual rate is converted to the equivalent monthly rate using compound interest: monthly_i = (1 + annual_i)^(1/12) − 1, reflecting the real effect of compounding.
Does the calculator account for inflation or taxes?
No. The result is the gross nominal return. Taxes on earnings and inflation over the period are not deducted.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is the initial amount, r the annual rate, n how many times per year interest compounds and t the number of years. Monthly contributions are added on top of that base.
How much does R$1,000 a month become in 10 years?
At 8% a year compounded monthly, roughly 1,000 × 12 × 10 = 120,000 contributed grows to about 183,000. Enter your own rate and period above to see the exact figure.
Does the calculator account for inflation or tax?
No. It shows the nominal result. To reason in real terms, subtract expected inflation from your rate before entering it, and remember that returns may be taxed.
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