How to calculate compound interest with monthly deposits

The formula

With no deposits, the balance after t years is A = P(1 + r/n)^(nt), where P is the starting amount, r the annual rate as a decimal and n the number of compounding periods a year. Regular deposits add the future value of a series of payments on top: with monthly compounding, D × ((1 + r/12)^(12t) − 1) ÷ (r/12) for a deposit D at the end of each month.

That shortcut only works when deposits and compounding happen at the same frequency. When they differ — monthly deposits into an account that compounds quarterly — the calculator works month by month at the equivalent monthly rate, which gives the right answer either way.

What makes the biggest difference

Time, then rate. Compounding frequency matters far less than people expect: 6% compounded monthly is about 6.17% a year, and daily only nudges that to about 6.18%. At 7%, money roughly doubles every ten years, so the last decade of a 30-year plan adds more than the first two.

What it does not tell you

It assumes one fixed rate and ignores tax and fees. That is exact for a fixed deposit or savings account. Money invested in markets goes up and down, so for investments treat the result as an illustration, not a forecast.