Compound Interest Calculator (Monthly)
Calculate portfolio growth with regular monthly contributions. Includes detailed principal vs. interest breakdown and stacked bar charts for long-term visualization.
About
For salaried professionals and consistent savers, the mechanism of wealth generation differs significantly from lump-sum investing. This tool models the accumulation phase of a portfolio where regular liquidity injections (monthly contributions) occur alongside the compounding of existing capital. The mathematical rigor here ensures that the timing of cash flows matches the compounding frequency, providing a precise estimation of terminal value.
A critical insight provided by this calculator is the "Crossover Point" - the moment when returns generated by the portfolio exceed the contributions added by the saver. Identifying this inflection point is essential for retirement planning (FIRE strategies), as it signals the shift from labor-driven growth to capital-driven growth.
Formulas
The calculation combines the future value of the initial principal with the future value of a series of payments (annuity):
Where PMT is the monthly contribution and n is the compounding frequency (typically 12 for monthly).
Reference Data
| Compounding Frequency | Annual Effective Rate (Nominal 5%) | Terminal Value ($10k, 10y) |
|---|---|---|
| Annually (n=1) | 5.00% | $16,288.95 |
| Semiannually (n=2) | 5.06% | $16,386.16 |
| Quarterly (n=4) | 5.09% | $16,436.19 |
| Monthly (n=12) | 5.12% | $16,470.09 |
| Weekly (n=52) | 5.13% | $16,483.25 |
| Daily (n=365) | 5.13% | $16,486.65 |
| Continuous (n=∞) | 5.13% | $16,487.21 |