How Much Could Your Savings Grow?
A little bit saved every month can add up. Compound interest means that the money you earn may also start earning interest as time passes. The trick is separating what you put in from what the interest itself adds.
Try the numbers below. Then scroll to the printable two-year example to see how compounding works without needing a finance textbook.
Compound Interest Calculator
This model compounds monthly, uses end-of-month contributions, and assumes the rate stays constant. All example amounts are editable.
How interest starts earning more interest
Important: This lesson uses annual compounding and no additional deposits so it’s easy to follow. The interactive calculator above uses monthly compounding and allows monthly deposits, so its results are different.
Compound interest explained in everyday language
Simple interest applies to the starting amount. Compound interest can apply to both the starting money and previously earned interest. The Consumer Financial Protection Bureau uses the $1,000 example above to show why the second year’s interest can be larger than the first’s.
Regular contributions are often the biggest part of a plan. The result separates what you deposited from the amount the model attributes to growth, so you can see the difference rather than confusing a large balance with investment gains.
Monthly compounding, annual rate, APY and fees
The calculator treats the annual rate as a nominal rate divided by twelve, applies a simple percentage fee drag each month, and adds your contribution at month-end. A bank’s annual percentage yield (APY) already incorporates compounding; entering its APY as though it were a nominal rate can slightly overstate the result.
The U.S. SEC’s Investor.gov calculator offers choices for different compounding frequencies. That’s helpful for comparing financial assumptions more precisely.
Does a 5% return mean I’ll definitely earn 5%?
No. Investment returns can be negative and savings-account rates can change. We use a constant example so you can explore the arithmetic, not to promise a future balance.
What does “in today’s dollars” mean?
The inflation input discounts the future result to illustrate purchasing power. It’s not an inflation forecast and doesn’t affect the nominal balance calculation.
Do taxes and withdrawals count?
Taxes and withdrawals are not modeled. Actual expenses, contribution timing, account terms and tax consequences can change your result. This is not individual financial advice.
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