Investing guide
Compound Interest With Monthly Contributions
Quick answer: Calculate the future value of the starting balance, then add the future value of the monthly deposits. For $10,000 initially, $500 deposited at each month end, a 7% nominal annual rate compounded monthly, and 20 years, the modeled ending balance is about $300,850.
Reviewed October 8, 2026 · Published by ToolRicherly
The formula
P is starting principal, PMT is the monthly contribution, r is the annual nominal rate as a decimal, and t is years. The formula assumes equal month-end deposits and a constant rate.
Worked example: $10,000 plus $500 a month
Over 20 years, the investor contributes $10,000 initially and $120,000 through 240 deposits. At the assumed rate, the combined balance reaches roughly $300,850. About $170,850 is modeled growth. This is an illustration, not a forecast: investments do not return the same amount each month.
Use the compound interest calculator with monthly contributions to change the balance, contribution, rate, years, and compounding frequency. Its yearly schedule separates deposits from growth.
Beginning-of-month vs end-of-month deposits
A beginning-of-month deposit has one additional month to grow. That arrangement is an annuity due; an end-of-month series is an ordinary annuity. Many calculators do not state which one they use. Richerly Tools uses month-end contributions and identifies that assumption with the result.
APR, nominal rate, and APY
A nominal annual rate needs a compounding frequency. APY already incorporates compounding over one year. Entering an APY as a nominal monthly-compounded rate slightly overstates growth. For advertised savings APYs, use the HYSA Growth Calculator.
Use three return scenarios
Compare a lower, base, and higher return instead of relying on one optimistic percentage. Fees, taxes, inflation, contribution changes, and market losses can materially alter the outcome. A useful projection answers what could happen under a stated assumption, not what will happen.
Frequently asked questions
How do I calculate total contributions?
Add the starting principal to the monthly deposit multiplied by the number of months: P + PMT × 12 × years.
Does monthly investing guarantee a profit?
No. The SEC defines dollar-cost averaging as investing equal portions at regular intervals regardless of market movements. It can create a consistent process but cannot eliminate loss.
Should I use a real or nominal return?
Use nominal returns for future-dollar balances. For purchasing power in today's dollars, use a consistently estimated real return or separately adjust the ending balance for inflation.
Sources and methodology
Primary references: U.S. SEC Investor.gov Compound Interest Calculator and Investor.gov Dollar-Cost Averaging. See our methodology. Educational use only.