Compound interest calculator
See what regular saving turns into, and how much of the total is growth rather than your own money.
Runs entirely in your browser. Nothing you enter is uploaded.
How this works
What compounding actually does
Compound interest means the return you earned last period earns its own return this period. Simple interest grows in a straight line; compound interest bends upward, and the bend is what makes long horizons behave so differently from short ones.
For a single lump sum, the future value is:
FV = P × (1 + r)^n
With regular contributions added at the end of each period, a second term is added for the stream of payments:
FV = P × (1 + r)^n + PMT × ((1 + r)^n − 1) / r
Here r is the rate per compounding period, not per year: at 6% compounded monthly, r is 0.005 and n is the number of months. Getting that conversion wrong is the single most common error in do-it-yourself spreadsheets.
Reading the chart
The columns split each year into what you contributed and what the returns added. Early on, the contribution block is almost the entire bar — your saving rate is doing all the work, and returns on a small balance are small in absolute terms. Watch for the year when the growth block passes the contribution block. That crossover is the clearest single indicator of whether a plan has enough time in it.
If the crossover never happens within your horizon, the plan depends entirely on how much you can put in rather than on investment returns. That is not a failure, but it changes what you should optimise: contribution amount, not rate.
Time beats rate, and both beat frequency
Three levers control the outcome, and they are not equally powerful.
| Change | Effect on the final balance |
|---|---|
| Ten more years of contributions | Typically doubles it or more |
| One percentage point of extra return | Roughly 20–30% over 30 years |
| Monthly instead of annual compounding | A few percent |
This ordering explains why starting early matters so much more than picking well. Ten years of ordinary returns beats a decade of clever ones you never had.
The number that keeps you honest
The nominal final balance is the exciting figure. The inflation-adjusted one is the useful figure. At 2% inflation, prices roughly double every 35 years; at 3%, every 24. A projection that ignores this consistently overstates what the money will actually buy, which is exactly the error you cannot afford in retirement planning.
Two things this calculator deliberately does not model: fees, which compound against you exactly as returns compound for you, and tax, which varies too much by country to guess at. Subtract your fund charges from the return rate before entering it, and treat the result as a pre-tax figure.
A note on smooth curves
Real markets do not deliver 7% a year; they deliver 22%, then −9%, then 4%. The smooth curve here is an average path, not a forecast, and the order in which good and bad years arrive matters a great deal if you are drawing money out. Use this to size the shape of a plan, and expect the actual line to be far messier.
Common questions
- What return rate should I enter?
- Use a rate you can defend, not a hopeful one. Broad stock market indices have returned roughly 7% a year above inflation over long periods, but with decades of variation around that average. Bonds and cash return far less. If you are unsure, run the calculation at three rates — pessimistic, expected, optimistic — and plan against the pessimistic one.
- Why does the growth bar overtake my contributions?
- That crossover is the whole point of compounding, and its timing is worth noting. With typical contributions and returns it usually falls somewhere between year 15 and year 25. Before it, your saving discipline is doing the work; after it, the portfolio is. Nothing changes at that moment except which half of the bar is larger.
- Does compounding monthly instead of yearly matter much?
- Less than most people expect. At 12% a year, monthly compounding beats annual by about 7% over ten years. At 5%, the gap is closer to 2%. Frequency is a rounding detail next to the rate itself and the length of time you leave the money alone.
- What does "in today's money" mean?
- It divides the final balance by cumulative inflation, so you can see what the sum would buy at present-day prices. A balance of 500,000 in thirty years at 2% inflation buys what about 276,000 buys now. It is the more honest number to plan a retirement against.
- Are fees and tax included?
- No. Both are excluded, and both matter. A 1% annual fee removes roughly a quarter of the final balance over 30 years. The simplest correction is to subtract your fund fees from the return rate before entering it.