Tool 04 · Compound interest
Watch your money grow itself.
Compound interest is the engine behind every other tool here: your returns start earning their own returns. Set a starting sum and a monthly deposit, and see how much of the final pile is money you never put in.
Of which $0 is growth you never deposited.
Pro features. Step up deposits, see today's-money value, read insights, and export the full schedule.
Model it properly
Refine the model
Raise your monthly deposit by this much every year.
Adds a “real value” line so you see what it’s worth in today’s prices.
Year by year
Compare return rates
| Annual return | Final balance | Interest earned |
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How compound interest works
Compound interest is interest earning interest. Each period your returns are added to your balance, and the next period’s growth is calculated on that larger balance. Over years this snowballs — which is why the share of your final pot that comes from growth you never deposited climbs steadily the longer you stay invested.
This calculator compounds monthly: it grows your starting amount, adds your monthly deposit, and applies your annual return spread across the year. The stacked bars show how much of each year’s balance is your own deposits versus accumulated interest. Pro lets you step up deposits over time and view the balance in today’s money after inflation.
Compounding is often called the eighth wonder of the world for a reason: its effect is exponential, not linear. In the early years the growth looks almost disappointing — a few percent on a small balance. But the curve steepens relentlessly, and in the final stretch your money can grow by more each year than you contribute. That’s why the two most important ingredients are time and consistency, not the size of any single deposit.
A worked example
€10,000 start · €300/month · 7% annual return · 25 years
You’d personally put in €100,000 over the 25 years, yet the balance grows to roughly €300,000 — meaning about €200,000, two-thirds of the total, is interest you never deposited. Leave it another five years and it keeps accelerating: the growth in those final years dwarfs the growth in the first ten.
Things to keep in mind
- Starting early beats saving more. A saver who begins at 25 and stops at 35 often ends up ahead of one who starts at 35 and saves for thirty years — time is the ingredient you can’t buy back.
- Fees compound too — against you. A 1% annual fee doesn’t cost 1% of your gains; it quietly removes a slice of growth every year for life. Our investment calculator shows exactly how much.
- Reinvest, don’t spend, the growth. The magic only works if returns and dividends are left to compound. Spending them turns exponential growth into linear.
- Inflation erodes the headline. A big future number is worth less in tomorrow’s prices; use a real (after-inflation) return, or switch on the Pro "today’s money" view.
Frequently asked questions
How much do fees really cost me?
Far more than the headline percentage suggests, because fees are charged every year on your whole balance and eat into money that would otherwise compound. Over a lifetime the difference between a 0.2% index fund and a 1% fund can run into six figures — see the investment calculator.
What’s the difference between simple and compound interest?
Simple interest is paid only on your original amount. Compound interest is paid on your original amount plus all the interest already earned — so it grows the balance faster and faster. Almost all real-world investing and most loans use compounding.
What is the rule of 72?
Divide 72 by your annual return to estimate how many years it takes your money to double. At 7%, that’s about 10 years. It’s a quick mental shortcut, not an exact figure.
What return should I use?
Historically a diversified global stock portfolio has returned roughly 7% a year after inflation over the long run — but any single decade can be much higher or lower. Use a figure you’re comfortable defending.
Monthly or annual compounding?
This tool compounds monthly, which matches how most regular-investing plans actually work and gives slightly higher results than annual compounding at the same rate.