How the compound Interest Calculator works
Your starting amount compounds at the frequency you choose, while monthly contributions compound monthly. The two are added together for the total, which is the standard way banks and finance texts combine a lump sum with a savings stream.
FV = P(1 + r/n)nt + c × ((1 + r/12)12t − 1) ÷ (r/12)
Example: $5,000 at 5% compounded monthly with $200 added each month grows to about $64,000 in 15 years. You put in $41,000 and interest contributes the remaining $23,000.
Frequently asked questions
Does compounding frequency matter much?
Less than most people expect. $10,000 at 5% for 10 years ends within about $65 whether it compounds annually or daily. The rate and the time matter far more than the frequency.
What is the rule of 72?
Divide 72 by your interest rate to estimate the years to double your money. At 6%, money doubles roughly every 12 years.
Is interest income taxed?
Interest in regular savings accounts and CDs is taxed as ordinary income in the year you earn it. Tax-advantaged accounts like IRAs defer or eliminate that tax.