fFinMath

Compound Interest Calculator

See how your savings grow with regular contributions. Supports multiple currencies, compounding frequencies, inflation, and tax on interest.

Inputs

$
$
%
%
%
Future Value
—
USD
Total Contributions
—
Total Interest
—
Real FV (today's $)
—
Effective Annual Rate
—

How Compound Interest Works

Compound interest is the engine that turns modest savings into meaningful wealth over time. Unlike simple interest, where you earn a fixed amount each period on the original principal, compound interest pays you interest on the interest already earned. Each period, the base grows — and so does the amount added.

The standard formula for future value with an initial lump sum and regular end-of-period contributions is:

FV = P × (1 + r/n)^(n·t) + PMT × [((1 + r/n)^(n·t) − 1) / (r/n)]

Where P is the principal, r is the annual nominal rate, n is the number of compounding periods per year, t is time in years, and PMT is the periodic contribution.

Nominal vs Effective Annual Rate

The rate printed on a savings account is usually the nominal rate. The effective annual rate (EAR) is what you actually earn after compounding is applied within the year. If a bank advertises 6% compounded monthly, the EAR is (1 + 0.06/12)^12 − 1 ≈ 6.17%.

More frequent compounding always helps, but the gain shrinks fast. Daily compounding barely beats monthly for typical rates.

Why Contribution Frequency Matters

Contributing $500 monthly for 30 years at 7% ends up larger than contributing $6,000 once a year at the same rate, because your earlier contributions spend more time compounding. For long horizons, consistency beats magnitude.

Inflation & Taxes — The Two Silent Drags

Nominal returns flatter what actually happened. If inflation runs at 3%, a 7% nominal return is only a ~3.9% real return — meaningful, but very different. This calculator shows the "Real FV (today's $)" so you can reason about actual purchasing power.

Similarly, interest is taxable in most jurisdictions. If you pay 30% tax on interest, your effective compounding rate falls proportionally. For tax-sheltered accounts (401(k), IRA, ISA, UK Cash ISA, Indonesian DPLK, Russian IIS, etc.), leave "Tax on Interest" at 0%.

The 72 Rule (Shortcut)

A classic approximation: divide 72 by your annual rate to get the years it takes to double your money. At 8%, that's ~9 years. At 4%, ~18 years. This calculator gives you the exact answer, but 72 is a useful gut check.

Common Scenarios

  • Retirement saver (US 401k): $500/month for 30 years at 7% real → roughly $590K in today's dollars.
  • Child's college fund: $10,000 initial + $200/month for 18 years at 6% → approximately $83K.
  • Emergency fund growth: $20,000 at 5% compounded monthly over 5 years → about $25,660 (no contributions).
  • Indonesian deposito: Rp 100,000,000 at 6% for 10 years with 20% tax on interest yields approximately Rp 164,000,000.

Limitations

This calculator assumes a constant interest rate. In reality, variable-rate accounts shift with central bank decisions, and equity returns are volatile. For retirement planning with volatile returns, use our FIRE Calculator which supports Monte Carlo scenarios. For loan-side compounding, see the Loan Calculator.

Related Tools