Compound Interest & Wealth Growth Calculator
Simulate how initial capital and recurring contributions compound over time with live updates.
Key concepts
Compound interest
Interest calculated on both your principal and previously earned interest, causing wealth to accelerate over time.
Simple vs compound
Simple interest applies only to the original amount. Compound interest reinvests earnings, which is why long-term investing grows exponentially.
What this tool does
How this calculator works
We apply monthly compounding with contributions at the end of each month. Adjust the sliders to see how time, rate, and regular deposits change your final balance instantly.
How compound interest works
Each period, earnings are added to your balance and then earn interest themselves. Over long horizons, that feedback loop matters more than the starting principal alone — which is why consistent contributions and time are so powerful.
NominalvsReal
Nominal is the annual rate before inflation. Real is the Fisher return, (1 + nominal) / (1 + inflation) − 1. Subtracting the two rates is a shortcut this page does not use.
Current CPI · 3.74%. Reference month: September 2026.
This is not an official real rate. Current CPI fills the latest 12-month CPI-U change and shows the reference month. You can still edit the field. Indicative rate, not a recommendation.
Compound interest formula
A = P(1 + r/n)^(nt) With monthly deposits: each month balance = balance × (1 + r/12) + contribution
P is principal, r is the annual rate (as a decimal), n is compounding periods per year, and t is years. FinTools4U uses n = 12: each month we grow the balance by the monthly rate, then add your end-of-month contribution. That matches how many brokerage accounts credit returns and deposits in practice.
Worked example
Example inputs: $10,000 initial investment, $500/month contribution, 8% annual return, 30 years. Over three decades you contribute $10,000 + ($500 × 360) = $190,000 of your own money. Compounding on monthly contributions typically produces a much larger ending balance than the sum of deposits alone — the gap is interest earned on interest. Use Scenario B in the calculator to compare a lower rate or shorter horizon and see how sensitive the outcome is.
Monthly vs annual compounding
How often interest is applied
- Monthly (this tool)
- 12 times per year
- Annual
- Once per year
Typical effect at the same nominal rate
- Monthly (this tool)
- Slightly higher effective yield (APY)
- Annual
- Lower effective yield than monthly
| Aspect | Monthly (this tool) | Annual |
|---|---|---|
| How often interest is applied | 12 times per year | Once per year |
| Typical effect at the same nominal rate | Slightly higher effective yield (APY) | Lower effective yield than monthly |
Common mistakes
- Treating a historical average return as a guarantee of future results.
- Ignoring inflation — nominal balances overstate purchasing power.
- Forgetting taxes on interest, dividends, or capital gains.
- Confusing APR (stated rate) with APY (effective yield after compounding).
Methodology on this page
Contributions are applied after monthly interest. Charts show year-end balances. Gross mode is nominal. Real mode also shows purchasing power and the Fisher return, (1 + nominal) / (1 + inflation) − 1. That figure is not an official real rate. Current CPI can fill the inflation assumption and shows its reference month. Net mode applies Brazilian regressive income tax to each lot’s gain only (calendar-day table) and assumes redemption at that date. Come-cotas is a separate fund toggle and does not replace that table. The 30-day IOF is still left out. Educational model, not tax advice.
Read the full FinTools4U methodology →Frequently asked questions
How is compound interest calculated?
We apply monthly compounding with end-of-month contributions: each month the balance grows by the monthly rate, then your contribution is added.
Can I compare two scenarios?
Yes. Enable Scenario B to compare different contribution amounts, rates, or time horizons side by side.
Does this account for taxes or inflation?
Gross is nominal by default. Real mode deflates the balance with an inflation assumption and reports the Fisher return. Net applies Brazilian regressive income tax to each deposit’s gain only. It is an educational model, not tax advice. Come-cotas is a separate fund toggle and does not replace that table. The 30-day IOF is still left out. Fed funds fills the custom annual rate from the official target-range midpoint, and you can still edit the field. The link stores the number you apply. Indicative rate, not a recommendation.
Is the real return an official rate?
No. Nominal is the annual rate you type. Real is the Fisher equation, (1 + nominal) / (1 + inflation) − 1. Current CPI fills the latest 12-month CPI-U change and shows the reference month. This page does not publish an official real rate. You can still edit the field.
Sources & further reading
- Investor.gov — Compound Interest — SEC Office of Investor Education overview of compounding.
- Investor.gov — Free Financial Planning Tools — Official educational calculators and investing basics from the SEC.