What Is Compound Growth? Contributions and a Constant Rate

Compound growth is the balance you end with when a starting amount and later contributions earn a return, and that return earns a return too. It answers a forward question: if this rate holds, where does the balance land?

Key takeaways

• The starting balance grows for every period. Each contribution grows only for the periods after it arrives.
• In this calculator, contributions arrive at the end of each month or year. The return compounds on that same schedule.
• $10,000 plus $500 a month at 10% a year for 20 years ends near $452,965. Money in is $130,000. Growth is about $322,965.
• The rate is an assumption you type. It is not a forecast of any security.

The formula

Future value = starting balance × (1 + periodic rate) ^ periods + contribution × ((1 + periodic rate) ^ periods − 1) ÷ periodic rate

A monthly contribution uses a monthly rate: the annual return divided by 12. A yearly contribution uses the annual return once a year. A zero return just adds the contributions to the starting balance.

A worked example

Start with $10,000. Add $500 at the end of each month. The annual return is 10%, compounded monthly, for 20 years.

• Months = 20 × 12 = 240.
• Money in = $10,000 + $500 × 240 = $130,000.
• Ending balance ≈ $452,965.
• Growth ≈ $322,965, the ending balance minus the money in.

Try the same inputs in the compound growth calculator. Leave inflation blank and the result stays in nominal dollars. Type an inflation rate and the page also restates that ending balance in today's dollars. The nominal balance does not change.

What compound growth tells you

It separates money you put in from growth on that money, under one constant rate. That split is the useful part. A large ending balance can be mostly contributions.

What compound growth leaves out

Taxes, fees, and withdrawals are absent. The rate does not change from year to year, and it does not describe a path that already happened. If you already have a start value and an end value and no contributions, CAGR is the backward reading. If the cash flows are dated deposits and withdrawals, use XIRR.

A company page such as Apple shows a live price and market cap, with an as-of date. It does not project your contributions. You type the rate.

For general education only. Nothing here is investment advice.