Work out how an investment grows with compound interest when you also add to it over time. Enter a starting amount, optional annual and monthly contributions, the rate and how often it compounds, and the term. You get the ending balance, the principal-versus-interest split, the interest earned by your initial amount versus your contributions, an inflation-adjusted buying power, and a year-by-year schedule.
Formula
Each compounding period the balance earns interest, and that interest is added back so it earns interest too. For a balance B, annual rate r, and n compounding periods per year, one period of growth is:
interest = B × (r / n) × (1 − taxRate)
B = B + contribution + interest
Buying power = Ending balance ÷ (1 + inflationRate)^years
Contributions made at the beginning of a period are added before interest is applied (earning that period's interest); contributions at the end are added after.
Simple vs. compound interest
| $1,000 at 10% for 3 years | |
|---|---|
| Simple interest | $1,300 ($100 each year) |
| Compound interest | $1,331 ($100, then $110, then $121) |
Examples
$20,000 + $5,000/yr · 5% · annually · 5 years
A $20,000 start with $5,000 added at the beginning of each year, compounded annually at 5%, grows to $54,535.20 after 5 years — $45,000 of principal and $9,535.20 of interest. At 3% inflation that balance has the buying power of about $47,043 in today's dollars.
$10,000 + $100/mo · 6% · monthly · 10 years
A $10,000 start with $100 added at the end of each month, compounded monthly at 6%, reaches $34,581.90 after 10 years from $22,000 of principal.