Compound interest calculator with monthly deposits

The two lines that explain compounding

The chart shows a straight dashed line — money you put in — and a curve that pulls away from it. The gap between them is interest earning interest: the "interest on interest" compounding is named for. Early on the lines sit almost on top of each other, which is why compounding feels slow for the first few years; given a decade or two, the curve does most of the work. That is the whole argument for starting early and automating the contribution.

The same mechanic runs in reverse on debt: interest you do not pay off compounds against you. If you are weighing saving against paying down a loan, run both numbers — this calculator for the savings side and the loan payment calculator for the debt side — and compare the rates. Paying off a 9% loan is a guaranteed 9% return.

Typical scenarios to try

An emergency fund in a 4.5% savings account: $0 start, $300 a month, 3 years. A retirement account at the long-run stock average: $10,000 start, $500 a month, 7%, 30 years. A child's education fund: $2,000 start, $250 a month, 6%, 18 years. Each takes seconds to model, and switching the rate between a cautious and an optimistic figure shows how wide the honest range of outcomes is.

A useful habit: whenever a number here surprises you, change one input at a time — rate, then years, then contribution — and watch which one moves the result most. For long horizons it is almost always years; for short ones, the contribution.

Frequently asked questions

How is compound interest calculated here?

The calculator walks month by month: each month the balance earns one-twelfth of the annual rate, then the monthly contribution is added. For a lump sum this matches the compound interest formula A = P(1 + r/n)^nt, and the walk stays exact even at 0% or with no starting amount. $10,000 plus $500 a month at 7% becomes roughly $300,000 after 20 years — about $130,000 of it contributions and $170,000 interest.

What does 'compounded monthly' mean?

Interest is added to the balance twelve times a year, and each addition itself starts earning interest — that is the compounding. Monthly compounding at 7% works out to an effective 7.23% per year. Daily compounding adds only a few hundredths of a percent more, which is why monthly is the standard assumption for planning.

What annual return should I assume?

High-yield savings accounts currently pay around 4–5%, broad stock-index funds have averaged about 7% after inflation over long periods, and bonds sit in between. The honest approach is to run the calculator at a conservative and an optimistic rate and plan between the two — small rate differences compound into large balance differences over decades.

Why does starting earlier matter so much?

Because interest earns interest, time is the biggest input. $500 a month at 7% grows to about $122,000 in 12 years but $610,000 in 30 — the last decade alone adds more than the first two combined. Waiting five years to start typically costs more than doubling the contribution later.

Is my financial data uploaded anywhere?

No. Every projection runs in your browser. Amounts and rates never leave your device, nothing is stored, and there is no sign-up.

What does Toolizto Pro add to the compound interest calculator?

The free tier computes the final balance, total contributions, interest earned and the growth chart without limits. Pro ($9.99/month or $79.99/year, covering every Toolizto tool) adds the year-by-year breakdown table, a savings-goal finder that computes the monthly amount needed to reach a target, CSV export, and removes ads.