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Compound interest: separate deposits from growth

Published by Navon Ventures S.A.S · October 20, 2026

Compound interest means accumulated interest joins the balance used to calculate later interest. A projection depends on the starting deposit, rate, time, compounding frequency and any additional contributions. A higher ending balance can come from adding more of your own money as well as from interest, so always separate the two.

Start with a no-contribution example

Without additional deposits, ending balance = principal × (1 + annual nominal rate ÷ periods per year)periods per year × years. With $10,000 at a hypothetical 4% nominal rate compounded annually for one year, the result is $10,400. After two years at that same rate, it is $10,816. The second year earns interest on the original deposit and on the first year's $400.

Do not confuse nominal rate with annual yield

At the same 4% nominal rate compounded monthly, the one-year calculation is 10,000 × (1 + 0.04 ÷ 12)12, or approximately $10,407.42. An effective annual yield already incorporates compounding. Entering an effective yield as a nominal rate can count the compounding effect again. Check how a quoted rate is defined before comparing it with this model.

Keep contributions visible

Adding $100 monthly for a year contributes another $1,200 of your own money. At zero interest, the ending balance would be $11,200. The difference between a modeled ending balance and total deposits is the modeled interest. Our compound interest calculator assumes deposits at the end of the selected contribution period, so the last contribution does not receive a full period of growth.

Read a projection as a scenario

The calculator uses a constant nominal rate and excludes fees, taxes and inflation. Daily compounding uses 365 periods per year. Compare no contributions with monthly or annual contributions to see which change drives the balance. A hypothetical fixed return is not an investment recommendation or a prediction of market performance. When comparing your scenarios, keep the horizon and rate definition consistent and consider how real-world charges or changing rates would alter the result.