Compound Interest Calculator Overview

This calculator projects how your money can grow over time using the compound interest formula. You provide:

• Your starting balance (current savings)
• Your monthly contribution
• Your expected annual return
• Your time horizon in years

The calculator then estimates how your balance grows year by year, separating your own contributions from the growth generated by compound returns.

Why Compound Interest Is Powerful

With simple interest, you only earn returns on your original deposit. With compound interest, you earn returns on both:

1. Your original contributions, and
2. The returns you've already earned.

This creates a snowball effect: growth builds on top of previous growth. Over long periods, this effect dominates your total balance.

Example:

• Monthly contribution: $500
• Average annual return: 8%