The power of compounding
With simple interest you only earn on your original deposit. With compound interest, the interest you earn is added to the balance and then earns interest itself. Given enough time, this snowball effect dwarfs the amount you originally put in.
The formula
The future value of a lump sum is:
- A — final amount
- P — starting principal
- r — annual interest rate (as a decimal)
- n — number of times interest compounds per year
- t — number of years
This calculator also adds the growth of your recurring monthly contributions on top.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both your original money and on the interest it has already earned. Over time this "interest on interest" effect makes savings grow faster and faster.
Does compounding frequency matter?
Yes, but less than people expect. More frequent compounding (daily vs annually) increases the result slightly; the bigger drivers are the rate, the amount of time, and how much you contribute.
Why are regular contributions so powerful?
Each contribution starts earning its own compound interest, and the earlier you add money the longer it has to grow. Small monthly amounts can become large sums over decades.
Is the result guaranteed?
No. The calculator assumes a constant rate of return. Real investments fluctuate, so treat the figure as a projection, not a promise.
Projections only, not financial advice.