Show growth of a lump sum or regular contributions over time.
The impact that time has on money is often underestimated. Everything changes when you realize that compound interest is interest on your interest, rather than just interest on your principal.
The fundamental formula is FV = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the frequency of compounding, and t is the number of years. You can include an annuity component by adding consistent contributions: with EAR = (1 + r/n)^n – 1, FV = PMT × [(1 + EAR)^t – 1] / EAR.
Most people do not appreciate how important compounding frequency is. A $10,000 investment compounded monthly at 6% over 20 years yields about $400 more than annual compounding — a small difference that illustrates a powerful concept.
The true power becomes apparent after year 15. The early years seem slow, but then the curve bends. After 20 years, a $10,000 lump sum growing at 7% annually reaches about $38,700. Add $2,000 per year and you get close to $120,000. That gap is pure compounding at work.
This calculator lets you visualize both lump sum and regular contribution scenarios, with compounding periods ranging from annually to monthly.