Monthly Compound Interest Calculator
Visualize the snowball effect of monthly interest reinvestment. Advanced financial projection tool with high-precision arithmetic for long-term savings.
About
Compound interest is often called the "eighth wonder of the world" because of its non-linear growth trajectory. Unlike simple interest, where your money grows linearly, monthly compounding means you earn interest on your interest twelve times a year. Over short periods, the difference is negligible. Over 20 or 30 years, it is the primary engine of wealth creation.
This tool is designed for long-term financial planning. It assumes a standard capitalization schedule where yields are reinvested at the end of every month. This is typical for high-yield savings accounts, bond funds, and dividend reinvestment plans (DRIPs). The arithmetic uses double-precision floating-point logic to minimize rounding errors that can compound significantly over 360+ months.
Formulas
The Future Value FV is calculated using the compound interest formula with frequency n = 12.
FV = P × 1 + r1212t
Where P is the principal, r is the annual rate (decimal), and t is years.
Reference Data
| Year | Simple Interest Balance | Monthly Compound Balance | Difference |
|---|---|---|---|
| Year 1 | 10,500 | 10,511 | +11 |
| Year 5 | 12,500 | 12,833 | +333 |
| Year 10 | 15,000 | 16,470 | +1,470 |
| Year 20 | 20,000 | 27,126 | +7,126 |
| Year 30 | 25,000 | 44,677 | +19,677 |