What compounding means
With compound interest, the interest you earn is added to the balance and itself starts earning interest. The more often it compounds, the faster the balance grows, which is why the effective yearly rate (APY) is higher than the quoted rate.
Formula for a single deposit: A = P × (1 + r/n)n×t, where r is the yearly rate, n the number of compounding periods a year and t the years. With continuous compounding, A = P × er×t.
Monthly contributions are added at the end of each month and grow at the same effective rate.