Compound Interest Calculator

What This Tool Does

Compound interest is “money making more money, and that new money joining the team to make even more.” Enter a starting amount, how much you add each month, the yearly rate, and how often interest is added. The chart shows how much is from your own deposits and how much grew as interest.

Compound vs. Simple

• Simple interest: only the original money earns interest.
• Compound interest: the interest you earned gets added back, so the next round earns on a bigger pile. Over time it grows like a snowball.

Quick story (ignoring taxes and fees):

1. Start with $1000 at 5% yearly, compounded monthly.
2. After month 1, interest is about $4.17, so balance is $1004.17.
3. In month 2, interest is calculated on $1004.17, so it becomes about $4.18.
4. The longer it goes, the faster it grows because interest is also earning interest.

How We Calculate (light version)

• Core idea: Final = Principal × (1 + rate / compounding times)^(times × years) + monthly deposits and their interest
• Monthly deposits are added before calculating that month’s interest.
• More frequent compounding (quarterly, monthly, daily) means interest is added more often and grows a bit faster.

Example Run

Try these numbers:

• Starting amount: $1000
• Monthly deposit: $200
• Yearly rate: 5%
• Compounding: monthly
• Time: 3 years

You’d see something like:

• End of year 1: about $3400 total, roughly $80 from interest
• End of year 2: about $5800 total, roughly $230 from interest
• End of year 3: about $8200 total, roughly $430 from interest

The chart separates “what you put in” from “what interest added” so the snowball effect is clear.

How to Use in This App

1. Fill in the starting amount you already have.
2. Add a monthly deposit (can be zero).
3. Move the rate and years sliders to test different plans.
4. Pick a compounding frequency (yearly, quarterly, monthly, or daily).
5. Watch the chart and milestones update to show how much interest shows up each year.

Tips

• Change numbers freely to see how steady deposits boost the curve.
• Even small rates become powerful with enough time; big rates need time to show their strength too.
• Adding a little more each month lets interest feed on itself, making the line bend upward faster.