Compound Interest Calculator
En español: Calculadora de interés compuesto →
- Deposits
- Interest
Interest makes up 25.6% of the final balance. Compounding monthly, deposits at the end of each month.
How the compound interest calculation works
The compound interest formula is A = P(1 + r/n)^(nt)
P is the starting amount, r the yearly rate, n the number of compounding periods a year and t the years. $10,000 at 5% compounded monthly for 10 years grows to $16,470.09.
Monthly deposits are added at the end of each month
Each deposit earns interest from the following month on. With a monthly rate i over m months, the deposits grow to PMT × ((1 + i)^m − 1) ÷ i.
Compounding is converted to a monthly rate
Daily or quarterly compounding is turned into the equivalent monthly rate, so the balance is exact for any combination of compounding and monthly deposits.
Interest is the balance minus everything you put in
The split bar shows how much of the final balance came from your own deposits and how much from interest.
Withdrawals come out at the end of each month
Each month the balance earns interest, takes the deposit and then pays the withdrawal. If the balance hits zero, that month is when the money runs out; the calculator looks up to 100 years ahead to find it.
Worked example. A business puts $10,000 into a cash reserve and adds $500 a month at 5% compounded monthly. After 10 years the balance is $94,111.23: $70,000 of deposits and $24,111.23 of interest.
Compound Interest FAQ
What is the formula for compound interest?
A = P(1 + r/n)^(nt), where P is the principal, r the yearly rate as a decimal, n the compounding periods per year and t the years. Interest earned is A − P. With regular deposits, add PMT × ((1 + i)^m − 1) ÷ i, where i is the rate per deposit period.
How much will $10,000 grow to in 10 years?
At 5% compounded monthly with no further deposits, $10,000 becomes $16,470.09. Set the monthly deposit to 0 above to check other rates and terms.
How is daily compound interest calculated?
The yearly rate is divided by 365 and applied every day: A = P(1 + r/365)^(365t). Daily compounding earns slightly more than monthly; at 5% the effective yearly rate is 5.13% instead of 5.12%.
What is the difference between compound and simple interest?
Simple interest is paid only on the original amount. Compound interest is also paid on interest already earned, so the balance grows faster each year.
Does compounding frequency matter much?
Less than the rate and the time. Going from annual to daily compounding at 5% raises the effective yearly rate from 5.00% to 5.13%. Adding years or regular deposits has a much larger effect.
How do you calculate compound interest with withdrawals?
Run the balance month by month: add the month's interest, add any deposit, then subtract the withdrawal. $200,000 at 5% compounded monthly with $1,500 taken out each month runs out after 16 years 4 months, having paid out $292,542.74, of which $92,542.74 was interest.
How long will my money last?
Enter the balance, the rate and the monthly withdrawal, set the deposit to 0, and read the headline. If the monthly interest is more than the withdrawal, the money never runs out: $200,000 at 5% earns about $833 a month, so $800 a month lasts indefinitely.
How much can I withdraw each month without running out?
The note under the result gives the most you can take each month so the balance reaches zero exactly at the end of the years you chose. For $200,000 at 5% over 30 years it is $1,073.64 a month.