Compound interest calculator: monthly contributions

Compound growth is the reason a modest monthly habit can turn into a six-figure balance: your returns start earning returns of their own. The calculator above shows how far a starting amount plus a fixed monthly contribution could grow at a steady yearly return — and, just as usefully, how much of the final balance is your own money and how much is growth.

How to use the calculator

You fill in four fields:

• Start amount — what you invest on day one, in USD. Enter 0 if you are starting from scratch.
• Monthly contribution — what you add every month.
• Average yearly return — the annual rate you want to test, in percent, before taxes and inflation.
• Years — how long you keep investing.

The calculator returns four numbers: the final value, the total contributions (start amount plus every monthly deposit), the growth from compounding (final value minus contributions) and growth as a share of the final value. The bar chart below the results shows the balance at the end of each year, split into what you paid in and what the market added.

The formula behind it

The calculator compounds monthly. It converts your yearly return r into an equivalent monthly rate:

monthly rate = (1 + r)^(1/12) − 1

Then, for every month, it grows the balance by that rate and adds your contribution at the end of the month:

balance = balance × (1 + monthly rate) + monthly contribution

Because the monthly rate is derived from the yearly one, a year with no deposits grows by exactly the yearly return you typed — 7% stays 7%, not the slightly higher 7.23% you would get by dividing 7% by 12 and compounding. Deposits made at the end of the month earn nothing in their first month, which is a small, conservative assumption.

Worked example

Say you invest $10,000 today, add $500 a month and assume a 7% average yearly return.

After	Contributions	Final value	Growth
10 years	$70,000	about $105,200	about $35,200
20 years	$130,000	about $292,500	about $162,500
30 years	$190,000	about $660,800	about $470,800

After 20 years, growth makes up about 56% of the balance; after 30 years, about 71%. The last ten years add more than the first twenty combined. That is compounding: the longer the horizon, the more the growth term dominates.

Now change one input. At 5% instead of 7%, the 20-year balance is about $229,400 — roughly $63,000 less from a two-point difference in return. Small differences in the rate you assume, or in the fees you pay, matter far more than they look.

Choosing a realistic return

The return field is an assumption, not a forecast. A few ways to make it more useful:

• Run a range. Try a cautious, a middle and an optimistic rate rather than relying on one number. Stock returns vary widely from year to year, and the calculator's smooth line hides that.
• Subtract costs. If your funds charge 0.5% a year, a 7% assumption becomes 6.5%. Over decades that gap compounds too.
• Think in today's dollars. Enter a return after expected inflation (for example 7% minus your inflation assumption) and the final value reads in roughly today's purchasing power.
• Mind the tax drag. In a taxable brokerage account, dividends and realized gains are taxed along the way. Inside a 401(k), traditional IRA or Roth IRA they are not taxed each year, so the pre-tax return is closer to what actually compounds. Our comparison of a Roth IRA and a taxable brokerage account covers the difference.

Common pitfalls

• Treating the output as a promise. Real portfolios fall as well as rise, and the order of returns matters when you are adding or withdrawing money.
• Forgetting that contributions change. Most people raise contributions as income grows. Re-run the numbers when your savings rate changes.
• Confusing yearly and monthly rates. Enter the yearly rate; the calculator converts it.
• Ignoring the starting point. For short horizons the start amount and contributions drive the result; compounding needs time to matter.

From projection to reality

A calculator shows what could happen. A portfolio tracker shows what did. GetHossa records your actual contributions and returns across brokerages and compares them with the S&P 500, so you can see whether reality is ahead of or behind your plan. Create a free account to start tracking.

This calculator is for illustration and education only. It does not account for taxes, fees or inflation unless you build them into the return you enter, and it is not investment advice.