Use this monthly compound interest calculator to estimate how an investment may grow when interest compounds monthly, and deposits are made consistently.
Monthly Compound Interest Calculator
Estimate how your investments grow with monthly contributions.
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What Is Monthly Compound Interest?
Monthly compound interest is the process of earning interest on both your original balance and the interest that accumulates over time, with interest applied once every month. Each month, interest is added to the account, and the next month’s interest is calculated using this higher balance.
Because interest is credited more frequently than annual compounding, monthly compounding typically results in higher long-term growth. This approach is common in investment accounts, retirement plans, and savings strategies that involve regular deposits.
Time plays a major role. The longer money remains invested, the more powerful monthly compounding becomes.
What Is a Monthly Compound Interest Calculator?
A monthly compound interest calculator estimates how an investment may grow when interest compounds monthly and deposits are made consistently. Instead of relying on rough assumptions, the calculator applies standard financial formulas to project future value.
This calculator factors in your starting balance, monthly contributions, annual interest rate, and investment length. It then separates your total balance into deposits and interest so you can see exactly where growth comes from.
The results update instantly as inputs change, making it easy to compare different savings or investment scenarios.
How This Monthly Compound Interest Calculator Works
This calculator performs two calculations behind the scenes. First, it projects how your initial deposit grows with monthly compounding. Second, it calculates the future value of your monthly contributions, recognizing that each deposit earns interest for a different amount of time.
Monthly compounding means interest is applied 12 times per year. Each compounding period builds on the previous one, creating a snowball effect over longer timelines.
The final balance displayed combines both calculations and shows a breakdown of total deposits and total interest earned.
Monthly Compound Interest Formula
The calculator uses standard compound interest math to estimate future value.
To calculate growth on the initial deposit, it applies the following formula:
FV = P × (1 + r ÷ 12)^(12 × t)
In this formula, P is the initial deposit, r is the annual interest rate expressed as a decimal, and t is the investment duration in years.
Monthly contributions are calculated using this formula:
FV = PMT × [ ( (1 + r ÷ 12)^(12 × t) − 1 ) ÷ (r ÷ 12) ]
Here, PMT represents the monthly contribution amount. This formula accounts for the fact that each deposit compounds over a different number of months.
The calculator adds both results together to estimate your total projected balance.
Key Terms Used in the Calculator
Initial Deposit
The initial deposit is the amount you start with before making any monthly contributions. Because it compounds for the entire investment period, early deposits can have a meaningful impact on long-term results.
Monthly Contribution
This is the amount added to the account every month. Consistent contributions often matter more than starting with a large balance, especially over long periods.
Annual Interest Rate
The annual interest rate represents the expected yearly return. The calculator converts this rate into a monthly rate to reflect monthly compounding.
Investment Duration
The duration shows how long your money remains invested. Longer timeframes allow compound interest to build momentum and increase total growth.
Total Interest Earned
Total interest earned is the amount gained beyond what you deposited. It highlights the effect of compounding rather than additional contributions.
Why Monthly Compounding Matters
Monthly compounding accelerates growth by allowing interest to build more frequently. Over time, this can result in a significantly higher balance compared to less frequent compounding schedules.
This calculator is designed to help estimate potential outcomes, compare scenarios, and plan contributions. Results are projections, not guarantees, but they provide a clear picture of how monthly compounding works over time.