How this calculator works
Each month the balance earns interest at the monthly equivalent of your annual rate and compounding frequency, and your contribution is added at the start or end of the month. Interest earned in one month earns interest in every month after it — that is the compounding.
Monthly rate i = (1 + rate ÷ k)^(k ÷ 12) − 1 k = compounding periods per year
FV = P(1 + i)^N + C × ((1 + i)^N − 1) ÷ i (× (1 + i) if deposits at start)
Assumptions and tips
- The rate stays constant. Real investment returns vary year to year.
- Taxes and fees are not deducted.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| Starting amount | $10,000 |
| Monthly contribution | $200 |
| Annual interest rate / return | 7 % |
| Years | 20 |
| Compounding | Monthly |
| Contributions made | End of each month |
| Result | Value |
|---|---|
| Future value | $144,573 |
| Interest earned | $86,573 |
| Total contributions | $58,000 |
| Effective annual rate | 7.229 % |
Balance over time:
- After 1 yr: $13,201 (contributed $12,400)
- After 5 yr: $28,495 (contributed $22,000)
- After 10 yr: $54,714 (contributed $34,000)
- After 15 yr: $91,882 (contributed $46,000)
- After 20 yr: $144,573 (contributed $58,000)
Step by step:
- Monthly rate = (1 + 7% ÷ 12)^(12 ÷ 12) − 1 = 0.5833%
- Starting amount grows to $10,000 × (1 + i)^240 = $40,387
- Contributions grow to $200 × ((1 + i)^240 − 1) ÷ i = $104,185
What $10,000 becomes (no monthly contributions)
Compounded monthly, no additional deposits.
| Return and years | Future value | Interest earned |
|---|---|---|
| 4% for 10 years | $14,908 | $4,908 |
| 4% for 20 years | $22,226 | $12,226 |
| 6% for 10 years | $18,194 | $8,194 |
| 6% for 20 years | $33,102 | $23,102 |
| 7% for 30 years | $81,165 | $71,165 |
| 8% for 20 years | $49,268 | $39,268 |
| 10% for 30 years | $198,374 | $188,374 |
Common mistakes to avoid
- Using an average stock return as if it were guaranteed — try a lower rate too.
- Forgetting inflation: 7% nominal growth with 3% inflation is about 4% in today’s dollars.
Frequently asked questions
How much will $10,000 grow in 20 years?
At 7% compounded monthly, with $200 added each month, it grows to about $144,600, of which about $86,600 is interest.
What is the rule of 72?
Divide 72 by the annual rate to estimate how many years it takes money to double: about 10 years at 7%.