# Compound interest and SIP calculator documentation

Inputs, formulas, assumptions and API/MCP examples for the compound interest and sip calculator. Reproduce a calculation and cite its sources.

Canonical calculator: https://klarfort.com/tools/compound-interest-calculator/
Content updated: 2026-09-07
Assumptions reviewed: 2026-09-07

## Overview
Explore how a starting balance and regular monthly contributions grow under a constant return assumption. SIP means systematic investment plan, modeled here as contributions at the beginning of each month.

You can grow the contribution amount over time, compare the ending balance with its inflation-adjusted value and check whether the projection reaches one million units of the selected currency.

## How to use
1. Enter the starting balance, projection length in months and assumed effective annual return.
2. Choose SIP for monthly contributions or lump sum for the starting balance alone.
3. For SIP, enter the monthly contribution and its annual growth rate. Add inflation and a starting month.
4. Calculate to compare the ending balance, total contributed, modeled gains and value in today's money.

## Understanding the result
Projected value includes the starting balance, contributions and modeled growth. Real value adjusts the ending balance for the inflation rate you entered; it is expressed in starting-period purchasing power.

The first-million milestone appears only if the balance reaches 1,000,000 in the selected currency within the projection. It is a numerical milestone, not a currency conversion or a forecast.

## Questions
### When are monthly contributions invested?
Contributions enter at the beginning of each month and earn that month's modeled return. Annual contribution growth is converted to a monthly factor, so increases occur gradually each month.

### Does lump-sum mode include the monthly contribution?
No. Lump-sum mode uses only the starting balance and assumed return. Select SIP when you want regular monthly saving included.

### Are investment fees and taxes included?
This calculator shows growth and an inflation adjustment without fees or tax deductions. The investment growth calculator provides separate fee, tax, withdrawal and simulation inputs.

## Default worked example
Projected value: 10,000 USD. Projected balance from your assumed return and beginning-of-month contributions. Assumptions as of 2026-09-07.

## Formula
balance[m] = (balance[m-1] + contribution[m]) × (1 + annual return)^(1/12); real value = final balance / (1 + inflation)^(months/12).

- Contributions are made at the beginning of each month. Annual returns are effective rates converted to monthly compound factors. All figures use one entered currency.
- Contribution growth compounds monthly from its entered effective annual rate. Lump-sum mode ignores the monthly contribution. The first-million threshold is 1,000,000 units of the selected currency.

## Inputs
- currency: Currency; default "USD"
- principal: Starting balance; default 10000
- months: Projection months; default 12
- monthlyContribution: Monthly contribution; default 0
- annualReturn: Annual return (%); default 0
- mode: Contribution mode; default "sip"
- contributionGrowth: Annual contribution growth (%); default 0
- inflationRate: Annual inflation (%); default 0
- startMonth: Starting month for the projected milestone date, in YYYY-MM format.; default "2026-09"

## Interfaces
Input schema: https://klarfort.com/tools/compound-interest-calculator/schema.json
Worked request and response: https://klarfort.com/tools/compound-interest-calculator/examples.json
Public table: https://klarfort.com/tools/compound-interest-calculator/table.json
JSON API: POST https://klarfort.com/tools/api/v1/compound-interest-calculator
MCP endpoint: POST https://klarfort.com/tools/mcp
MCP tool name: compound-interest-calculator

## JSON request body
```json
{
  "currency": "USD",
  "principal": 10000,
  "months": 12,
  "monthlyContribution": 0,
  "annualReturn": 0,
  "mode": "sip",
  "contributionGrowth": 0,
  "inflationRate": 0,
  "startMonth": "2026-09"
}
```

## Usage and credit
Free for personal, commercial and any other lawful use with credit to KlarFort at https://klarfort.com/. Third-party data terms still apply.

Computed with KlarFort Calculators, https://klarfort.com/

Place a visible credit near the reused material or in the credits for your work or integration. One clear credit per work or integration is sufficient; no separate credit per API request is required. The credit_url field contains the homepage. The citation_url field is an optional calculator reference. Full permission: https://klarfort.com/tools/docs/license/

## Sources
KlarFort calculation methodology: https://klarfort.com/tools/methodology/ (1)