Simple vs Compound Interest
Now supports monthly contributions, flexible compounding frequency, and a clear year-by-year breakdown.
Estimated reading time: 3 minutes
What this calculator does
It compares Simple vs Compound interest growth using the same set of inputs. You can:
- Toggle modes: Simple or Compound.
- Add monthly contributions to see how regular deposits change the curve.
- Pick a compounding frequency (Annually, Semi-Annually, Quarterly, Monthly, or Daily) when in Compound mode.
- See real-time totals: Final Amount, Total Interest, and Total Contributed.
- Review a year-by-year breakdown of starting balance, contributions, interest, and ending balance.
How to use it
- Enter your Principal ($), Annual Rate (%), and Years.
- (Optional) Add a Monthly Contribution ($). We assume contributions happen at the end of each month.
- Choose a Compounding Frequency if you’re in Compound mode: Annually, Semi-Annually, Quarterly, Monthly, or Daily.
- Use the Simple / Compound toggle to compare outcomes instantly.
The Results panel updates immediately. Scroll down to the table to see how the balance evolves year by year.
Interpreting results
- Final Amount — your ending balance at the end of the period.
- Total Interest — the portion of your ending balance that came from growth.
- Total Contributed — your principal plus all monthly deposits.
Over longer time horizons, Compound typically outpaces Simple because interest earns interest. If the difference looks small, try increasing years, rate, or contribution size.
Year-by-year breakdown
The table shows each year’s starting balance, contributions, interest, and ending balance. Monthly contributions post at the end of each month, so they begin earning growth the following month.
In Compound mode, interest compounds at the chosen frequency (converted internally to an equivalent monthly rate). In Simple mode, interest accrues on principal-to-date only —interest itself doesn’t earn interest.
Under the hood (formulas)
- Compound with monthly contributions: monthly rate rm = (1 + r/n)n/12 − 1. Each month: balance = balance × (1 + rm) + PMT.
- Simple with monthly contributions: monthly interest = (principal to date) × (r/12). Contributions increase principal, but interest does not compound.
- Totals: “Total Contributed” = initial principal + all monthly deposits.
Assumptions: constant nominal rate; contributions at end of month; frequency choice affects compounding only in Compound mode.
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