How to use this calculator
This tool implements the standard compound formula FV = PV × (1 + r/n)n·t plus any extra contributions. PV is the principal you enter, r is the annual rate (enter 3 for 3%), n is the number of compounding periods per year (1 for annual, 12 for monthly, 365 for daily) and t is the number of years.
With monthly compounding the annual rate is converted into a monthly rate, interest is settled every month and that interest is added to the balance so it earns interest too. Daily compounding works the same way. All else being equal, a higher frequency gives a slightly larger final balance — but the gap is usually far smaller than the effect of simply investing for longer. That is the heart of compounding: time matters more than frequency.
To model a plan where you add money every year, fill in the extra contribution field. The amount is added at the beginning of each period and compounds from there.
For a fuller walkthrough of the inputs, see how to use the calculator. To understand where the formula comes from, read the formula explained.