Compound Interest Calculator + Monthly Deposits
See how your money grows over time with the power of compounding. Add monthly contributions to maximise your results.
When monthly contributions are added to a compounding balance, you're computing the future value of an annuity. The formula is FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)]. Most real-world plans — retirement, house deposit, education funds — use this, not lump-sum compounding.
Pure lump-sum compounding is a textbook scenario. Real life is monthly contributions: payroll deductions into a 401(k) or workplace pension, standing orders into an ISA, automated transfers into a high-yield savings account. The future-value-of-annuity formula has four inputs that matter: starting principal (P), monthly contribution (PMT), annual rate (r), and time horizon in years (t), with n typically set to 12 for monthly compounding.
Two timing variants change the result by 5-10% over long horizons. An ordinary annuity (end-of-period contributions) is the standard convention and how most retirement and savings vehicles operate. An annuity due (start-of-period contributions) pays a small premium because each contribution earns one extra compounding period of growth — relevant if you pay rent-like contributions at the start of each month.
A worked example illustrates why consistency dominates contribution size: - Person A contributes $500/month for 40 years starting at age 25 (total $240k contributed) at 7% real: ends at ~$1.31M - Person B contributes $500/month for 30 years starting at age 35 (total $180k contributed) at 7% real: ends at ~$612k - Person C contributes $1,000/month for 30 years starting at age 35 (total $360k contributed) at 7% real: ends at ~$1.22M
Person C contributed 50% more than Person A and still ended with less. The first decade of compounding matters more than the last decade — this is the most under-priced insight in personal-finance arithmetic.
This calculator lets you stress-test three patterns most plans ignore: 1. Sequence-of-returns risk — a 30% market decline in years 1-3 of accumulation has minimal long-term impact; the same decline in years 28-30 is catastrophic 2. Contribution escalation — a 3% annual increase (tracking wage growth) typically lifts the 30-year terminal balance by 35-50% 3. Real vs. nominal returns — long-term plans built on 8% nominal returns with 0% inflation give wildly optimistic projections; use real returns throughout
For real-return inputs, the BLS CPI series (US) and ONS CPI series (UK) are the standard inflation references.
| Year | Balance | Interest This Year | Total Contributions |
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How to use this calculator
Takes about 2 minutes.
- Enter your starting amount (principal) in the Starting Amount field
- Set the annual interest rate you expect to earn
- Pick the number of years you'll let the money grow
- Choose how often interest compounds — daily, monthly, quarterly, or yearly
- Add an optional monthly contribution and click Calculate to see your final balance and year-by-year growth
Try these scenarios
Tap a scenario to load it into the calculator above.
Methodology & Sources
This calculator implements the standard compound-interest formula: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]. Region-specific tax and rate defaults are sourced directly from each country's primary government source and reviewed against the publication date below.
- USA: IRS — federal income tax brackets and contribution limits.
- UK: GOV.UK — HMRC personal allowance, National Insurance, and dividend rates.
- SA: SARS — personal income tax brackets and tax rebates.
Last verified: May 2026.
Key concepts
Principal vs. interest. Your principal is the money you put in; interest is what the bank or market pays you for letting it sit. Compounding means the interest you earned in year one starts earning its own interest in year two — and the effect snowballs over decades.
Compounding frequency. Interest can be credited annually, monthly, or daily. More frequent compounding gives a slightly higher effective return, but the gap is small compared with what changing the headline rate or time horizon does.
Rule of 72. Divide 72 by your annual rate to estimate how many years it takes your money to double. At 7%, that's roughly 10 years; at 10%, about 7.
Real vs. nominal returns. A 7% nominal return with 3% inflation is only a 4% real return in purchasing-power terms. For long-horizon planning, focus on real returns. The U.S. S&P 500's long-run real return is about 7% before taxes (Federal Reserve and Robert Shiller data).
Tax wrappers matter. Compounding inside an ISA (UK), Roth IRA (US), or TFSA (SA) is tax-free; outside, interest is taxed annually at your marginal rate, which slows growth materially over 20+ years.
Frequently Asked Questions
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