Investment Simulator How to calculate compound interest with monthly contributions
Start with $1,000 and add $100 a month. See what compounds, how to convert an annual return and why deposit timing matters.
Compound interest means the growth you leave invested can earn growth of its own. With $1,000 up front, $100 deposited at the start of each month and a constant 5% effective annual return, the balance after 10 years is $17,128.10 before taxes, fees and inflation. You put in $13,000 and the remaining $4,128.10 is modelled growth.
Convert the annual return before calculating
If the annual input is an effective return, use (1 + annual return)^(1/12) − 1 for the monthly rate. A 5% effective annual return gives about 0.4074% per month. Dividing 5% by 12 applies a different convention, used when 5% is a nominal annual rate compounded monthly.
Build the balance month by month
At the start of each month, add $100 to the previous balance and multiply the result by one plus the monthly rate. Repeat 120 times and round only the final result. With contributions at the end of each month, reverse the order and the same inputs give $17,065.21. The $62.89 difference comes from every deposit getting one less month of growth.
| Scenario | Total put in | Balance after 10 years |
|---|---|---|
| $100 deposited at the start of each month | $13,000 | $17,128.10 |
| $100 deposited at the end of each month | $13,000 | $17,065.21 |
| No monthly deposits | $1,000 | $1,628.89 |
Try the inputs in Investment Simulator
In the compound interest calculator, enter $1,000 as the initial amount, $100 as the monthly deposit, 5% as the yearly rate and 10 years as the term. Leave additional deposits, tax and inflation at zero to reproduce the first row. For a second run, keep the dollar inputs fixed and change the rate. That isolates the effect of the return assumption.
For a separate calculator with explicit compounding-frequency settings, see Investor.gov’s Compound Interest Calculator.