How to use it
- Enter the starting amount, the yearly interest rate and how many years the money stays invested (decimals such as 2.5 are fine).
- Pick the compounding schedule your account uses – savings accounts are usually daily or monthly, bonds yearly or half-yearly.
- Optionally add a regular contribution every month or year and choose whether it is paid at the start or the end of each period.
- Read the final balance, the split between what you deposited and the interest earned, and the APY.
- Open the growth table or download it as CSV to see each year’s interest; copy the link to keep the scenario.
Example
10,000 at 5% compounded monthly for 10 years: the monthly rate is 0.05 ÷ 12 = 0.0041667 and there are 120 periods, so the balance is 10,000 × 1.0041667¹²⁰ = 16,470.09. Adding 100 at the end of every month contributes 12,000 and grows to 100 × (1.0041667¹²⁰ − 1) ÷ 0.0041667 = 15,528.23, giving a total of 31,998.32. Of that, 22,000 was deposited and 9,998.32 is interest. The effective annual rate is 1.0041667¹² − 1 = 5.116%.
Formulas and assumptions
Lump sum: A = P · (1 + r/n)^(n·t) continuous: A = P · e^(r·t)
Contributions: FV = PMT · ((1 + i)^N − 1) / i × (1 + i) if paid at the start of each period
i = (1 + r/n)^(n/m) − 1 (rate per contribution period, m payments a year), N = m · t
Interest earned = A + FV − P − PMT · N
APY = (1 + r/n)^n − 1P is the starting amount, r the nominal yearly rate, n the number of compounding periods per year (365, 12, 4 or 1), t the time in years, PMT the contribution and m how many contributions are made per year. When the contribution schedule differs from the compounding schedule – for example monthly deposits into a daily-compounding account – the rate per contribution period is derived from the compounding factor, so interest between deposits is credited correctly. The growth table evaluates the same formulas at each year end; a fractional final year is pro-rated in the last row.
Assumptions and limits: the rate stays fixed for the whole term, contributions are constant, no withdrawals, fees or taxes are deducted, and daily compounding uses 365 periods a year (banks sometimes use 360 or 365/366). Amounts are shown with two decimals but calculated at full precision.
Sources: US Securities and Exchange Commission – Compound interest, Consumer Financial Protection Bureau – APY.
Projections only. Real accounts have variable rates, fees and taxes; this is not investment advice.
Questions
- Should I enter the APR or the APY?
- Enter the nominal yearly rate (APR) together with the compounding schedule; the calculator then shows the APY. If your bank only quotes an APY, choose yearly compounding and enter the APY as the rate – the result is the same.
- What is the difference between start-of-period and end-of-period contributions?
- A start-of-period deposit earns interest for one extra period. Over 10 years of 100-a-month deposits at 6% that is 16,469.87 instead of 16,387.93 – a difference of one month of growth on the whole stream.
- Why is daily compounding barely better than monthly?
- The gain from more frequent compounding shrinks quickly and converges to the continuous limit e^(rt). At 5% over 10 years, daily beats monthly by only 16.56 on 10,000, and continuous compounding adds just 0.56 more.