Compound interest is often called the "eighth wonder of the world" because of its powerful ability to grow wealth over time. Unlike simple interest, where you only earn money on your principal amount, compound interest allows you to earn interest on the interest you've already accumulated. This calculator helps investors, savers, and financial planners visualize how regular contributions and annual returns accumulate over decades.
How the Compound Interest Calculator Works
This tool uses a standard financial formula to project the future value of your portfolio based on four key inputs:
Initial Investment: This is your starting point. Whether it's $1,000 or $50,000, this principal starts earning interest immediately.
Monthly Contribution: Consistency is key in investing. This input accounts for the fresh capital you add to your portfolio every month (e.g., from your salary).
Annual Interest Rate: This is your expected Rate of Return (RoR). While the stock market historically averages around 7-10% (inflation-adjusted), conservative investments like bonds or HYSAs might offer 3-5%.
Investment Period: Time is your greatest asset. The longer your money stays invested, the more the compounding effect accelerates.
The Power of Time
Consider two investors: Investor A starts investing $500/month at age 25. Investor B waits until age 35 to start investing $500/month. Even if they both retire at 65, Investor A will have significantly more money—not just because they contributed for 10 more years, but because those first 10 years of contributions had 40 years to compound.
Realistic Rate of Return Examples
When inputting your interest rate, it helps to be realistic based on your asset class:
High-Yield Savings Accounts: Typically 3% – 5%
Government Bonds: Typically 3% – 6%
S&P 500 / Stock Market Index Funds: Historically 7% – 10% average
Real Estate: Varies greatly, often 8% – 12% (including leverage)
Note: This calculator assumes interest compounds monthly, which is standard for most savings and investment accounts. Inflation and taxes are not deducted from these figures.
function calculateGrowth() {
// Get input elements by ID strictly matching the HTML
var initialInput = document.getElementById("initialDeposit");
var monthlyInput = document.getElementById("monthlyContribution");
var rateInput = document.getElementById("interestRate");
var yearsInput = document.getElementById("yearsToGrow");
// Parse values
var P = parseFloat(initialInput.value); // Principal
var PMT = parseFloat(monthlyInput.value); // Monthly Contribution
var r = parseFloat(rateInput.value); // Annual Interest Rate
var t = parseFloat(yearsInput.value); // Years
// Validation logic
if (isNaN(P) || isNaN(PMT) || isNaN(r) || isNaN(t)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (P < 0 || PMT < 0 || r < 0 || t <= 0) {
alert("Please enter positive values. Years must be greater than 0.");
return;
}
// Calculation Logic
// Formula: FV = P * (1 + r/n)^(n*t) + PMT * [ ((1 + r/n)^(n*t) – 1) / (r/n) ]
// Where n = 12 (compounded monthly)
var n = 12; // Monthly compounding frequency
var rateDecimal = r / 100;
var monthlyRate = rateDecimal / n;
var totalMonths = n * t;
// Part 1: Future value of the initial deposit
var futureValuePrincipal = P * Math.pow((1 + monthlyRate), totalMonths);
// Part 2: Future value of the monthly contributions
// If interest rate is 0, logic is simple addition
var futureValueContributions = 0;
if (rateDecimal === 0) {
futureValueContributions = PMT * totalMonths;
} else {
futureValueContributions = PMT * (Math.pow((1 + monthlyRate), totalMonths) – 1) / monthlyRate;
}
var totalFutureValue = futureValuePrincipal + futureValueContributions;
var totalPrincipalInvested = P + (PMT * totalMonths);
var totalInterestEarned = totalFutureValue – totalPrincipalInvested;
// Display Results
var resultContainer = document.getElementById("result-container");
var balanceDisplay = document.getElementById("totalBalance");
var principalDisplay = document.getElementById("totalPrincipal");
var interestDisplay = document.getElementById("totalInterest");
// Format currency (USD)
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
balanceDisplay.innerHTML = formatter.format(totalFutureValue);
principalDisplay.innerHTML = formatter.format(totalPrincipalInvested);
interestDisplay.innerHTML = formatter.format(totalInterestEarned);
// Show the result box
resultContainer.style.display = "block";
}