The formula
A starting balance grows by (1 + r ÷ k)k × t, where r is the annual rate as a decimal, k is how many times a year interest is added and t is the number of years. Each monthly contribution is compounded for the number of periods left after it is deposited, so money added later earns less than money added at the start.
Worked example
| Start | Monthly | Rate | Years | Future value | Interest earned |
|---|---|---|---|---|---|
| $5,000 | $200 | 5%, monthly | 10 | $39,188.21 | $10,188.21 |
The same balance compounded annually instead of monthly finishes a little lower, because interest starts earning interest slightly later. The gap is small at modest rates and grows with both the rate and the time.
The rate is an assumption, not a forecast
Savings accounts, bonds and stock markets do not pay a flat rate for a decade. This tool shows what a constant rate would produce, which is useful for comparing scenarios and useless as a prediction of what an investment will actually return.
Contributions matter more than the starting balance
Over long periods the regular contribution usually overtakes the original deposit. Set the starting amount to zero to see what saving a fixed sum each month does on its own.
Related guides
Frequently asked questions
Does this account for tax?
No. Interest in a taxable account is reduced by whatever tax applies to it, so real growth will be lower.
What does the compounding frequency change?
How often interest is added to the balance. More frequent compounding earns slightly more at the same stated rate.
Can the contribution be zero?
Yes. Leave it blank or enter 0 to see a lump sum grow on its own.