Compound interest: understand the effect of time
What changes when your interest earns interest too.
Growth builds on itself
With compound interest, each period starts from a balance that includes earlier interest. In a hypothetical annual-compounding example, 1,000 at 5% becomes 1,050 after one year and 1,102.50 after two. That example rate is not an offer.
Try your scenario
Enter an initial balance, monthly contribution and term. Our tool converts the effective annual rate into its monthly equivalent: r = (1 + EAR)^(1/12) − 1. Contributions arrive at month-end. At a zero rate, the result is simply your initial balance plus contributions.
Understand the limits
The result assumes a constant rate and excludes costs and inflation. Changing the term or rate helps compare scenarios, but cannot predict the performance of a real investment.
Sources and access dates
Investor.gov · Compound interest calculator ↗ · Accessed: 2026-11-03
Examples are hypothetical. This content is not individual advice. To report an error, see our corrections policy.