Compound Interest Calculator · Practical guide
Compound Interest Calculator With Monthly Contributions
How steady monthly deposits multiply the power of compounding.
At a glance
The Short Answer
Monthly contributions transform the outcome. $10,000 invested at 7% compounded monthly for 20 years becomes $40,387.39 on its own — but adding $500 every month lifts the final balance to about $302,370, of which only $130,000 is money you paid in.
Interactive tool
Compound Interest Calculator
Enter your own values, then compare the result with the examples below.
Growth Summary
Year-by-Year Breakdown
| Year | Start Balance | Contributions | Interest | End Balance |
|---|
Where the Extra $172,370 Comes From
Each monthly deposit compounds separately for the time it remains invested. Your first $500 earns interest for all 240 months; your last earns it for one. The sum of 240 little compound-interest futures, plus the original principal, is what produces the total. Total interest earned in this example: $172,370 — more than the contributions themselves.
Lump Sum vs. Lump Sum + Monthly
| Strategy (7%, monthly, 20 yrs) | Total Paid In | Final Balance | Interest Earned |
|---|---|---|---|
| $10,000 once | $10,000 | $40,387.39 | $30,387.39 |
| $10,000 + $500/month | $130,000 | $302,370.09 | $172,370.09 |
Start Early, Contribute Steadily
Because deposits made early compound longest, the habit matters more than the amount: $200 a month from year one beats $400 a month starting halfway through, given enough horizon. Enter your own principal, contribution, rate, and frequency in the calculator above, and use the year-by-year breakdown to see each year's interest outgrow each year's deposits as the balance builds.
Frequently Asked Questions
Is it better to invest a lump sum or monthly?
If you already have the cash, a lump sum starts compounding on the full amount immediately. Monthly investing is how most people actually build wealth — from income, over time — and it still captures most of compounding's power.
How much does $500 a month grow to in 20 years?
Starting from zero at 7% compounded monthly, $500 a month grows to roughly $261,983 — from $120,000 contributed. Starting with $10,000 raises it to about $302,370.
Are contributions made at the start or end of each month?
This calculator adds each contribution at the start of the month, so every deposit earns that month's interest — the slightly more optimistic convention.
Can I change the contribution amount later?
The calculator assumes a constant monthly deposit. To model a raise in contributions, run it in stages: calculate the balance at the changeover point, then use that figure as the new principal.