The Investment & Compound Interest Calculator simulates the long-term growth of your investment funds.
Calculates compound interest with options for regular monthly or annual contributions. Displays a yearly balance projection, total profit, and ROI. Supports various compounding frequencies: daily, monthly, quarterly, and annually.
Calculator information
📋 How to use this calculator
- Enter your initial investment in USD, for example $10,000.
- Set your recurring contribution (monthly or annual) if any, such as $500 per month.
- Enter the estimated annual return in percent (e.g., 8% per year for a balanced mutual fund).
- Pick a compounding frequency: daily, monthly, quarterly, or annually. Monthly is most common.
- Set the investment horizon in years (1-50).
- Click Calculate to see the ending value, total contributions, total gains, and ROI.
- Compare several scenarios (low/medium/high return) before picking an instrument.
🧮 Future Value with Recurring Contributions
FV = P(1 + r/n)^(nt) + PMT * [((1 + r/n)^(nt) - 1) / (r/n)]
- FV = ending value of the investment (USD)
- P = initial principal (USD)
- r = annual return as a decimal (8% = 0.08)
- n = compounding periods per year (12 for monthly)
- t = time horizon (years)
- PMT = contribution per compounding period (USD)
The formula assumes a constant return and end-of-period contributions (ordinary annuity).
💡 Worked example: Index fund investment over 20 years
Given:- Initial principal P = $10,000
- Monthly contribution PMT = $500
- Return r = 10% per year
- Monthly compounding n = 12
- Horizon t = 20 years
Steps:- Compute r/n = 0.10/12 = 0.008333
- Compute nt = 12 * 20 = 240 periods
- FV of principal = 10,000 * (1.008333)^240 = $73,280
- FV of contributions = 500 * [((1.008333)^240 - 1) / 0.008333] = $379,684
- Total FV = 73,280 + 379,684 = $452,964
Result: Ending value ~ $452,964. Total contributions $130,000 ($10,000 + $120,000); total gain $322,964, or a 248% ROI over 20 years.
❓ Frequently asked questions
What is compound interest?
Compound interest is interest calculated on principal plus accumulated interest, so your money grows exponentially. Simple interest, by contrast, applies only to the original principal. This is what Einstein reportedly called the eighth wonder of the world. The longer the horizon, the more dramatic the compounding.
What returns are realistic for U.S. investors?
Long-term historical annual returns: savings accounts/CDs 0.5-5%, Treasury bonds 4-5%, investment-grade corporate bonds 5-6%, balanced funds 6-8%, S&P 500 index (1928-2024) ~10% nominal/~7% real, and gold ~7-9%. These figures are before inflation, which has averaged ~3% in the U.S. Past performance doesn't guarantee future returns.
Does the calculator account for inflation?
No - this calculator returns nominal (face) value. For real purchasing power, subtract inflation from the return: a 10% nominal return at 3% inflation is roughly 7% real. Use a separate inflation calculator to translate future targets back to today's dollars. Always plan with a safety margin.
What's the difference between monthly and annual compounding?
More frequent compounding produces a slightly higher ending value because earnings are reinvested sooner. At a 10% return over 30 years on $10,000: annual compounding ends at $174,494; monthly $199,099; daily $200,773. The gap between monthly and daily is tiny. Most real instruments compound monthly or daily.
Are investment gains taxable?
It depends on the account and instrument. Taxable brokerage accounts: long-term capital gains (>1 year) are taxed at 0/15/20%; short-term gains are taxed as ordinary income. Qualified dividends get long-term rates. Bond interest (except municipals) is ordinary income. Tax-advantaged accounts: 401(k)/Traditional IRA defer taxes until withdrawal; Roth IRA/Roth 401(k) grow tax-free. Always check current IRS rules for limits and phase-outs.
📚 Sources & references
Last updated: May 11, 2026