Definition
In investing, a contribution is an amount of money regularly added to a savings account or investment account on top of the initial balance. Regular contributions dramatically accelerate wealth building because each new deposit immediately starts earning compound interest. Even small monthly contributions can have a large impact over long time horizons.
Example
You start with $10,000 and add $500 per month at 7% annual return compounded monthly. After 20 years, your balance is $300,851. Of that, $130,000 comes from your own contributions ($500 × 240 months + $10,000 initial), and $170,851 comes from compound interest. Without the monthly contributions, the $10,000 alone would grow to only $40,388.
How It’s Calculated
The future value of a series of contributions uses the annuity formula: FV = C × [(1 + r)n − 1] / r, where C = contribution amount, r = monthly rate, n = number of periods. This is added to the compounded principal: P × (1 + r)n. Our calculator combines both.
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