Practical Tools
Finance

Compound Interest Calculator

Initial deposit or current savings (can be 0)

Expected annual return, e.g. 7 for 7%

Enter 0 if no regular deposits

Used to show the real (purchasing-power) value of your balance

Enter an interest rate and time period above to see your projection.

See how your savings or investments grow over time with the power of compounding. Enter your starting amount, regular contributions, expected annual return, and compounding frequency to get a year-by-year growth table, total interest earned, and the real inflation-adjusted value of your final balance. The calculator works for savings accounts, index funds, pensions, and any investment with a predictable return.

No signupRuns in your browserFormula explained belowGeneral information only
Projections are illustrative only and assume a constant rate of return. Actual investment returns vary and past performance does not guarantee future results. This tool is for planning purposes only and does not constitute financial advice.

How to use this tool

  1. 1Enter your starting amount - the money you have today or plan to deposit initially. You can enter 0 if you are starting from nothing.
  2. 2Enter your annual interest rate as a percentage. For a savings account use the stated AER. For investments, use a conservative estimate - 5-7% is commonly used for long-term stock market projections.
  3. 3Enter the number of years and choose the compounding frequency - how often interest is calculated and added to your balance. Monthly is most common for savings accounts; daily for high-yield accounts; annually for most investment projections.
  4. 4Enter a regular contribution amount and choose whether you will make it monthly or annually. Leave blank or enter 0 for a lump sum with no ongoing deposits.
  5. 5Optionally enter an inflation rate to see the real purchasing power of your final balance in today's money. 2-3% is a typical long-term inflation estimate.
  6. 6Read the final balance, total interest earned, and the visual split showing how much of your balance is your deposits versus compound growth. Download the year-by-year CSV for further analysis.

Formula used

The calculator runs a month-by-month simulation. Each month: add the monthly contribution, then apply the effective monthly interest rate. The effective monthly rate is derived from the annual rate and compounding frequency using: monthly rate = (1 + annual rate / compounding periods)^(compounding periods / 12) - 1. Real value = nominal balance / (1 + inflation rate)^years.

Example

Long-term pension or retirement fund

Starting amount: $10,000. Monthly contribution: $500. Annual return: 7%. Compounding: monthly. Time: 30 years. Inflation: 2.5%. Result: final balance of approximately $637,000. Total deposited: $190,000. Interest earned: $447,000 (70% of the final balance - compound growth dwarfs contributions by year 20). Real inflation-adjusted value: approximately $330,000 in today's money.

Short-term savings goal

Starting amount: $5,000. Monthly contribution: $300. Annual return: 4.5%. Compounding: monthly. Time: 5 years. Inflation: not entered. Result: final balance of approximately $27,400. Total deposited: $23,000. Interest earned: $4,400. At 5 years the compounding effect is modest - most of the balance is from contributions, not interest. This illustrates why time is the most important variable in compounding.

Common use cases

  • Planning a pension or retirement fund by projecting how regular monthly contributions grow over 20-40 years
  • Comparing savings accounts or investment options by entering different interest rates to see the long-term difference
  • Setting a savings target - working backwards from a desired final balance to figure out how much to contribute monthly
  • Understanding the impact of starting early - comparing a 30-year projection versus a 20-year projection with the same monthly amount
  • Estimating the real purchasing power of a savings balance after accounting for inflation
  • Showing children or students how compound interest works using real numbers and a concrete year-by-year table

Common mistakes

  • Using gross investment return without accounting for platform fees, fund management fees, or tax on gains - a 7% gross return might be 5-5.5% net, which changes the final balance significantly over 30 years
  • Entering a monthly contribution amount when the tool asks for the frequency - make sure the amount and frequency match (e.g. 500 monthly is not the same as 500 annually)
  • Using nominal interest rate and nominal final balance to make purchasing power decisions - always check the inflation-adjusted real value to understand what the money will actually buy
  • Assuming a constant return rate for stock market investments - real markets fluctuate, so a projection at a fixed 7% is an average scenario, not a guarantee
  • Forgetting that tax may apply to interest or investment gains - in a taxable account, part of the interest earned will be paid as tax, reducing the effective compounding rate

Frequently asked questions

What is compound interest?

Compound interest is interest calculated on both the initial principal and all previously accumulated interest. Unlike simple interest (which only applies to the original amount), compound interest grows exponentially because each period's interest becomes part of the base for the next calculation. The longer the time period, the more powerful the effect - a common illustration is that small differences in rate or time lead to very large differences in final balance.

What compounding frequency should I choose?

Choose the frequency that matches your actual account or investment. Most savings accounts compound monthly or daily; most bonds compound semi-annually; some investment returns are effectively annual. More frequent compounding gives slightly higher returns for the same stated annual rate. Daily compounding versus monthly compounding on a 5% rate over 30 years makes only a small difference, so do not agonise over it if you are estimating.

What annual interest rate should I use for investments?

For savings accounts, use the current AER (Annual Equivalent Rate) stated by your bank. For investment accounts and index funds, historical long-term average returns for diversified global stock markets have been around 7-10% annually in nominal terms, but past performance does not guarantee future results. Many financial planners use 5-7% as a conservative real-terms estimate after inflation. For a range of outcomes, run the calculator at 4%, 7%, and 10% to see best, mid, and optimistic scenarios.

What is the difference between nominal and real returns?

A nominal return is the stated percentage gain on your investment. A real return is the nominal return minus inflation. If your investment grows by 7% but inflation is 3%, your real return is approximately 4% - meaning your purchasing power grew by 4%. The inflation-adjusted balance shown in this calculator reflects what your final balance is worth in today's money. It is usually significantly lower than the nominal balance for long time horizons.

Is my data saved or uploaded?

No. All calculations run entirely in your browser. Your inputs are never sent to a server or stored anywhere.

Why does starting 10 years earlier make such a big difference?

Because compounding is exponential, the growth in the later years of a long savings period is dramatically larger than in the early years. A balance of $100,000 at 7% earns $7,000 in year one. That same balance compounding for 30 years becomes approximately $761,000. The last 10 years of a 30-year savings plan often generate more growth than the first 20 years combined. This is why starting early - even with small amounts - has an outsized impact on final balance.

Can I use this for a mortgage or loan?

This calculator is designed for savings and investment growth. For loans and mortgages, use the Loan Amortization Schedule tool, which shows the monthly principal and interest breakdown and the impact of making extra payments.

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