Compound Interest Calculator

Each month your balance earns a return, and next month that return earns a return too. With a monthly contribution the balance evolves like this: balance = balance × (1 + i) + contribution where i is the monthly rate derived from the annual one. Simple interest would only ever pay on your original deposit — compounding pays on everything that has accumulated.

The two lines on the chart are what you put in and what you have. They start almost together, then separate — slowly, then not slowly at all. That gap is the interest, and it grows with the square of nothing you control except time. This is why starting early beats contributing more later: a contribution made in year one is compounded for the entire run, while one made in year nineteen barely gets going.

The rate you pick decides everything, and it is the easiest place to fool yourself. Long-run stock market averages are often quoted around 7-10% before inflation — real returns are lower, and no year actually delivers the average. Use a conservative number, and treat the result as a shape, not a promise.