Compound Interest Calculator
See how an investment grows from a starting amount plus regular contributions, with an optional yearly contribution increase, and view the result in today's dollars and after tax.
Assumptions
- Interest compounds at the frequency you choose, and contributions are added at the frequency you choose, at the start or end of each period as selected.
- When the compounding and contribution frequencies differ, the annual rate is converted to an exact effective rate per contribution period, so the result is correct for any mix of the two (for example, monthly contributions with daily compounding).
- The yearly contribution increase steps up the contribution once per year. The first year uses the base amount, and the increase applies from the second year onward, compounding year over year. Within a year the contribution is level.
- The interest rate is constant for the whole period, and the number of years is treated as a whole number.
- The future balance, total contributions, and interest earned are nominal. The inflation-adjusted value discounts only the nominal final balance to today's dollars, dividing by (1 + inflation) raised to the number of years; the interest rate, your contributions, and the year-by-year schedule are not separately adjusted for inflation.
- Tax is applied once at the end to the gains only, never below zero, at the rate you set. Gains are the final balance minus your total contributions, where total contributions means your starting amount plus every periodic contribution you make. The after-tax balance is the nominal balance minus that tax; it is a single end-of-period tax, not a year-by-year tax drag.
- Inflation and tax are shown as independent single-factor adjustments: the inflation-adjusted value ignores tax and the after-tax value ignores inflation. There is no combined after-tax, inflation-adjusted figure, to keep the outputs clear.
- Not modeled: variable returns or sequence-of-returns risk (one steady rate is used, not real-world market swings), investment fees or expense ratios, and any year-by-year or transaction-level taxes beyond the single end tax on gains. Every result is rounded to the nearest cent.
- This is an estimate for educational purposes only, not financial, legal, or tax advice. Real investment returns vary from year to year, and your actual taxes and fees will differ. Consult a qualified professional for guidance specific to your situation.
How it works
Compound interest earns interest on your interest. A balance growing at rate r per period becomes
balance × (1 + r) each period, so growth accelerates over time. This calculator adds two pieces: a
starting amount that compounds, and a recurring contribution that builds up as an annuity.
The future value is:
FV = P · (1 + i/m)^(m·years) + PMT · [((1 + rPer)^n − 1) / rPer]
where P is the starting amount, i the nominal annual rate, m the compounding periods per year, PMT the contribution, and n the number of contributions.
The detail most calculators get wrong is mixing frequencies. If you contribute at a different rhythm than the interest compounds (say monthly contributions with daily compounding), the contribution has to earn the effective rate over its own period, not the nominal rate. We convert it exactly:
rPer = (1 + i/m)^(m/k) − 1
where k is the contributions per year. When the two frequencies match, this reduces to the
simple i/m.
Worked example
$10,000 to start, $6,000 contributed once a year, 6% nominal rate compounded monthly, for 10 years:
- Effective annual rate (because interest compounds monthly):
(1 + 0.06/12)^12 − 1 = 6.16778%, slightly above the nominal 6%. - Starting amount:
10,000 × (1 + 0.06/12)^120 = $18,193.97 - Contributions:
6,000 × ((1.0616778)^10 − 1) / 0.0616778 = $79,710.68 - Future balance =
$18,193.97 + $79,710.68 = $97,904.65
You contributed $70,000 in total, so $27,904.65 is interest. A calculator that applied the plain 6% to the annual contributions would show roughly $911 less, because it would ignore that the money compounds monthly.
Assumptions and limits
The rate is constant, and the headline future balance, total contributions, and interest are nominal. If you set an inflation rate, the calculator also shows the final balance in today’s dollars by discounting it by (1 + inflation) raised to the years; if you set a tax rate, it shows a one-time tax on the gains and the after-tax balance. Those two adjustments are independent, so there is no combined after-tax, inflation-adjusted figure. Investment fees, expense ratios, year-by-year tax drag, and the real-world variability of returns are not modeled, so treat the result as a smooth, best-case projection.
Sources
- Standard time-value-of-money formulas (future value of a lump sum and of an annuity).
- Effective interest rate conversion for differing compounding and contribution frequencies.
Frequently asked questions
- How does compound interest work?
- Compound interest pays interest on both your original money and the interest already earned, so the balance grows faster over time. The longer the money compounds and the more often, the larger the effect.
- Does contributing monthly instead of annually matter?
- Yes, a little. Contributing more often means each dollar is invested for longer on average, so it earns slightly more. This calculator handles any mix of contribution and compounding frequency using an exact effective-rate conversion.
- How does the yearly contribution increase work?
- It raises your contribution once a year. The first year uses the amount you entered, and from the second year onward the contribution grows by the percent you set, compounding each year. So a 500 a month contribution with a 3 percent yearly increase becomes about 515 a month in year two, 530 in year three, and so on. Within a year the contribution stays level.
- How are the inflation-adjusted and after-tax values calculated?
- The inflation-adjusted value, or today's dollars, takes the nominal final balance and divides it by (1 + inflation) raised to the number of years, which shows what that future balance would buy today. The after-tax value applies your tax rate once at the end to the gains only (the final balance minus everything you contributed) and subtracts that tax from the balance. The two are independent: the inflation-adjusted value does not include tax, and the after-tax value does not include inflation, so each shows one effect clearly.
- Does this account for taxes and fees?
- It can estimate a one-time tax on your gains if you set a tax rate, applied at the end. It does not model year-by-year tax drag or investment fees, both of which would lower a real-world result. Leave the tax rate at 0 for a tax-advantaged account such as a Roth, where qualified withdrawals are not taxed.
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Last reviewed June 2026. For education, not financial advice.