Recurring Compound Interest Calculator

Saving $300 a month at 5% for 10 years grows to about $46,498

A recurring compound interest calculator shows what a starting balance and a monthly contribution become when they earn an average annual return. Put in $300 a month for 10 years and you contribute $36,000.00. At an average 5% a year, with each contribution made at the start of the month, the balance reaches $46,497.62, a gain of $10,497.62. Keep going for 20 years and the $72,000.00 you contribute grows to $122,237.33: double the time, nearly five times the gain.

The sections below cover how the math works, why a 5% average return is not the same as 5% divided by 12, results by term and return, start-of-month versus end-of-month contributions, the Rule of 72, taxes and inflation, working backward from a goal, common mistakes and the limits of the model.

How the calculation works

1. Enter a starting balance and a monthly contribution. Either one can be 0.
2. Enter the term in years or months and the average annual return. A negative return is accepted if you want to test a loss.
3. Choose the contribution timing. At the start of the month, the money earns a return that same month. At the end of the month, the contribution is added after that month's return.
4. Open the optional section to enter a tax rate, an inflation rate, a yearly increase in your contribution or a goal amount. Tax starts at 0 and inflation at 2%.
5. The result shows the projected balance in large type, a bar splitting it into what you put in and what you earned, and a table of contributions and balance (every year for the first 10 years, then every 5 years).

The monthly rate is i = (1 + annual return)^1/12 − 1. At 5% a year, i is about 0.4074%, and compounding it 12 times gives exactly 5%. With start-of-month contributions, each month adds your contribution and then multiplies by (1 + i). With end-of-month contributions, it multiplies by (1 + i) first and then adds the contribution. A starting balance grows from the first month: $10,000 at 5% for 10 years becomes $10,000 × 1.05¹⁰ = $16,288.95.

Why 5% a year is not 5% divided by 12

Some savings products quote a nominal rate that is divided by 12 and credited monthly. Dividing 5% by 12 gives 0.4167% a month, which compounds to about 5.12% over a year, slightly more than 5%. Investment returns are normally quoted as the growth you actually got over a year, so this calculator adjusts the monthly rate so that 5% a year is exactly 5% after 12 months. For $300 a month over 10 years with start-of-month contributions, an average 5% a year gives $46,497.62, while a nominal 5% compounded monthly gives $46,778.79, a difference of $281.17. If a bank quotes an APY, enter that APY as the annual return and you get the right result.

For a simple deposit or a plain savings plan, the installment savings calculator fits better.

What changes with the term and the return

Both tables use start-of-month contributions and show amounts before tax. The gain grows faster than the contributions as the term and the return rise, because earlier gains earn returns of their own. That is compounding.

Start of month or end of month

A contribution made at the start of the month earns a return for that month, so each deposit gets one extra month of growth. With $300 a month for 10 years at 5%, start-of-month contributions end at $46,497.62 and end-of-month contributions at $46,308.95, a difference of $188.67. If you contribute mid-month, the true result sits between the two.

The Rule of 72

Divide 72 by the annual return in percent and you get a rough number of years for money to double. The U.S. Securities and Exchange Commission's Investor.gov explains this shortcut. At 5%, 72 ÷ 5 = 14.4 years, while the exact figure is log 2 ÷ log 1.05 = 14.21 years. At 7% the rule gives about 10.3 years (exactly 10.24), and at 10% it gives 7.2 years (exactly 7.27). The rule works best for returns that are neither very high nor very low.

Taxes and inflation

How much tax you owe depends on the account. According to the IRS, most interest you receive, or that is credited to an account you can withdraw from without penalty, is taxable income in the year it becomes available to you. Other accounts, such as a taxable brokerage account, a 401(k) or an IRA, follow their own rules, and the rate also depends on your income and filing status. For that reason the tax rate in this calculator starts at 0. If you know a rate that fits your account, enter it in the optional section and the calculator applies it once to the final gain.

Money you receive in the future buys less than the same amount today. The Federal Reserve says it judges inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures, to be most consistent with its mandate, so the calculator starts with 2% inflation to express the result in today's money. Start with $10,000, add $300 a month for 10 years at 5%, and you contribute $46,000.00 and end with $62,786.56. At 2% inflation that is worth $51,506.85 in today's money.

Working backward from a goal

Enter a goal and the calculator shows the first month in which the after-tax balance reaches it, and the monthly amount you would need to reach it within the term you chose. For example, $500 a month for 20 years at 7% ends at $255,203.03, which falls short of $300,000. To reach $300,000 in the same 20 years with no tax, you would need to contribute $587.77 a month. If you assumed a 20% tax rate on the gain (an example, not a rule), the after-tax balance from $500 a month would be $228,162.42, and reaching $300,000 after tax would take $657.43 a month. If you also enter a yearly increase, the required amount is the first-year monthly contribution.

The calculator also handles contributions that rise each year. Start at $300 a month and raise it 5% every year for 10 years: you contribute $45,280.41 in total, and at a 5% return the balance is $57,349.09.

Common mistakes

• Entering a monthly return as the annual return: 0.5% a month is about 6.17% a year, not 0.5%.
• Treating a nominal rate and an average annual return as the same thing: a rate divided by 12 and compounded monthly gives a slightly larger result.
• Reading the before-tax balance as money you can keep: taxable accounts owe tax on the gain, and the amount depends on the account.
• Reading a distant future amount as today's purchasing power: $245,609.35 after 30 years is worth about $135,593.77 in today's money at 2% inflation.
• Assuming a past average return will repeat every year: actual returns rise and fall, and in a down year the balance can be lower than what you put in.

Limits

• The model assumes the same return every year. With real returns that vary, the same average can produce a different result for recurring contributions.
• Tax is a single rate applied once to the final gain. It does not model yearly taxes, contribution limits, tax-deferred growth, the order of gains and losses, or fees.
• It assumes one contribution a month, at the start or the end of the month. Daily compounding is not covered.
• The term is limited to 50 years (600 months), and amounts are rounded to the cent.

Reference date The Federal Reserve inflation goal and the IRS statement on interest were checked on their websites on 2026-10-07. Every figure here is a result of this calculator, and the 5%, 7% and 2% rates are examples, not forecasts.

Sources

• 01Federal Reserve Board: Why does the Federal Reserve aim for inflation of 2 percent over the longer run?Longer-run inflation goal of 2 percent, measured by the PCE price index
• 02IRS: Topic no. 403, Interest receivedMost interest received is taxable income in the year it becomes available
• 03U.S. SEC Investor.gov: What is compound interest?How compound interest works and the Rule of 72
• 04U.S. SEC Investor.gov: Compound Interest CalculatorOfficial calculator for a starting amount, monthly contribution, term and rate
• 05CFPB: How does compound interest work?How compound interest differs from simple interest

Frequently asked questions

Related tools