Compound Interest Calculator

The compounding effect

Compound interest is the engine behind every long-term savings or investment plan: each period's gains start earning their own gains. This tool answers "if I start with X, add Y per month for N years at R% return, what do I end up with?" — and shows the year-by-year split between contributions and interest so you can see exactly where the growth comes from.

The formula

For a starting principal P at annual rate r compounded n times per year over t years, with periodic end-of-period payment PMT:

A = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) − 1] / (r/n)

The first term is your principal compounding by itself; the second is the future value of the contribution stream. Internally this tool walks year by year (12 sub-steps per year) so it stays accurate even when contribution frequency differs from compounding frequency.

Where the projection breaks down

• Constant-rate assumption. The math assumes the rate doesn't change. Real markets don't behave that way — they zig-zag. A 30-year "expected 7%" can deliver anywhere from 4% to 10% averaged over realistic periods. Treat the number as a ballpark.
• Inflation isn't subtracted. A balance of $1,000,000 in 30 years buys roughly what $400,000 buys today (at 3% inflation). Use the retirement-projection tool for inflation-adjusted figures.
• Taxes aren't subtracted. Tax-sheltered accounts (ISA, Roth IRA, 401k, pension wrappers) compound gross; taxable brokerage accounts compound net of dividend tax. Difference compounds.
• Contribution timing matters slightly. This tool assumes end-of-period contributions; beginning-of-period contributions earn one extra period of interest each, ~1× nominal-rate more across the life.
• Fees are silent killers. A 1% expense ratio over 30 years drains roughly 20% of your final balance. Subtract fund/platform fees from your expected return input.

The numbers behind the intuition

• The Rule of 72 is a useful sanity check. Years to double = 72 ÷ rate. At 8% real return, money doubles every 9 years. At 4%, every 18. The rule is accurate within ~1 year for rates between 2% and 12%. Memorise it and you can verify any compound interest calculator's output mentally — if the doubling pattern doesn't fit, the inputs are wrong.
• Real returns are what actually matter. Most calculators (including this one) compound nominal returns. To project actual buying power, subtract your assumed inflation rate from the return. A 7% nominal return at 2.5% inflation is a 4.5% real return — the "real" curve is what your future self will spend. Showing your spouse "you'll have €1M at 65" is honest in nominal terms, but it buys what €470K buys today after 30 years of typical inflation.
• Sequence-of-returns risk applies in withdrawal phase. Compound math assumes a smooth average return, but real markets bounce. A 30-year accumulator who happens to start retirement just before a 30% market drop can end up with materially less than the calculator suggests — because they're now withdrawing from a depressed balance. The defence is bond/cash buffer in the first 5-10 years of retirement, not better return assumptions during accumulation.
• The "tax wrapper" multiplier is huge over decades. Same monthly contribution, same return, taxable brokerage vs Roth IRA / ISA / PEA: the wrapper saves the dividend/capital-gains tax on every compounded year. Over 30 years, that's typically 15-25% of the final balance back in your pocket. If your country has tax-advantaged retirement accounts with unused contribution room, that's the highest-leverage move in personal finance — see our compound interest article for the math.
• The 4% rule is a starting point, not a destination. "Withdraw 4% of your starting nest egg, adjusted annually for inflation, and you have a high probability of not running out over 30 years" — the Trinity Study finding. It's a heuristic from US data, not gospel. Real planning factors in: variable spending (most retirees naturally adjust), longer time horizons (40+ years for early retirees), Social Security / state pension floors, and home equity. Use 4% as a rough sanity-check on your nest-egg target, not as a withdrawal recipe.

Pairs with

• retirement-projection — inflation-adjusted view + withdrawal phase.
• mortgage-refi-comparison — compare investing the savings vs. paying down a mortgage.
• currency-converter — if you're tracking a multi-currency portfolio.

$10,000 over 30 years

Start with $10,000, add $200/month, and let it compound at 6% for 30 years. The balance lands near $258,000. Here's the part that matters: your own contributions total only $82,000 ($10,000 up front plus $72,000 paid in) — the other roughly $176,000 is interest earning interest. That's the whole case for starting early: time, not deposit size, does most of the work.

Quick answers

Is this the real value or the nominal value? Nominal. At 2.5% inflation, that $258,000 in 30 years buys what about $123,000 buys today. To plan in today's money, subtract your inflation assumption from the return, or use the retirement-projection tool.

Does compounding frequency change the result much? A little. Monthly compounding beats annual at the same headline rate, but the gap is small next to the effect of the rate itself and the time horizon. Don't chase compounding frequency; chase low fees and more years.

Why do fees matter so much? A 1% annual fee over 30 years quietly erases roughly a fifth of the final balance, because it's skimmed off the compounding base every year. Subtract fund and platform fees from the return you enter.

Does it assume the rate never changes? Yes — it's a constant-rate projection. Real markets zig-zag, so treat the output as a ballpark, not a promise.

The math under the hood

With regular deposits the balance is two formulas added together: the lump sum grows as P(1 + r/k)^kt, and the stream of contributions grows as an annuity, PMT · ((1 + r/k)^kt − 1) ÷ (r/k) — where r is the annual rate, k the compounding periods per year, and t the years. The engine of the result is that each period's interest is added to the base the next period's interest is charged on. That feedback loop is why the balance curve steepens over time and why the final total is dominated by growth-on-growth rather than by the money you actually paid in.

The fee-and-inflation blind spot

Entering a headline return gross of fees and inflation. A 1% annual fee skims the compounding base every year and can erase roughly a fifth of a 30-year balance; inflation then means the big nominal number buys far less than it looks. Enter a return already net of fund and platform fees, and keep inflation separate so you know the real, spendable figure.

Related

Use the retirement projection to apply this to a real retirement pot, the inflation calculator to convert the nominal balance into today's money, and the ROI calculator to annualise a single investment's return. Our guide on the three compound-interest myths that cost real money unpacks where the intuition usually goes wrong.