Compound Interest Calculator
Calculate how your savings evolve over time by applying compound interest to an initial capital plus monthly contributions.
Results
Final capital
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Total contributed
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Interest generated
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The final capital is calculated compounding monthly: initial capital — (1 + r)^n, plus the future value of monthly contributions [(1+r)^n - 1] / r, where r is the monthly interest rate and n the number of months.
Capital evolution
Contributions vs. Interest
Year-by-year evolution
| year | Final capital | Total contributed | Interest generated |
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When should you use this calculator?
This compound interest calculator helps you project how your savings can grow by combining an initial capital, regular contributions and an estimated return, compounded monthly over the period you choose.
How it is calculated
The final capital is calculated by adding two parts: the growth of the initial capital, initial capital — (1 + r)^n, and the future value of the periodic contributions, contribution — [(1 + r)^n ∑’ 1] / r, where r is the monthly interest rate (the annual rate divided by 12) and n the total number of months. The second part of the formula is what makes periodic contributions generate, on top of their own value, the interest for every month they have left until the end of the period.
Simple interest is always calculated on the initial capital, so it generates the same amount of interest every period. Compound interest, on the other hand, adds the interest generated each period to the capital, so from that point on that interest also generates new interest: it's literally interest on interest. This difference looks small at first, but accelerates over time: the longer the time horizon, the bigger compound interest's advantage over simple interest.
Practical example
A numeric example: starting with €1,000 of initial capital and contributing €100/month over 10 years at an estimated 5% annual rate, the initial capital alone would grow to €1,647.01, and the accumulated monthly contributions (€13,000 in total contributed over the 10 years) generate a future value of €15,528.23. The resulting final capital is €17,175.24, of which €4,175.24 is interest generated, not money directly contributed.
Common mistakes
A common mistake is treating the entered interest rate as a guaranteed figure: this calculator makes a purely mathematical projection with a constant rate, but no real investment or savings product guarantees a fixed return indefinitely, and past performance doesn't guarantee future results. Another frequent mistake is not adjusting for inflation: a 5% nominal return with 3% inflation is only roughly a 2% real return, and it's the real return that actually matters for the future purchasing power of the capital.
Legal and tax context
Compounding frequency also affects the result, though more moderately than contributions: compounding monthly instead of annually, on the same €1,000 initial capital at 5% annual over 10 years with no additional contributions, gives €1,647.01 with monthly compounding versus €1,628.89 with annual compounding. The difference is small over short horizons but widens over very long-term investments.
The taxation of the return obtained varies depending on your country of residence and the type of product (savings account, investment fund, pension plan, shares), so it's worth checking the tax rules that apply to your situation before treating the projected final capital as definitive. The variable that most affects the result isn't how much you contribute each month, but for how long you let the capital grow: starting to save a few years earlier, even with modest contributions, tends to generate more final wealth than starting later with larger contributions.
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Frequently asked questions
What is compound interest?
It is interest calculated not only on the initial capital but also on the interest generated in previous periods, causing exponential growth of savings over the long term.
What is the difference between simple and compound interest?
Simple interest is always calculated on the initial capital, while compound interest reinvests the interest generated, which in turn generates new interest. Over the long term, compound interest produces a much larger final capital.
How does contribution frequency affect the result?
The more frequent the contributions (monthly versus annual, for example) and interest compounding, the greater the cumulative effect and therefore the final capital obtained.
What risks does long-term investing carry?
This calculator offers a mathematical projection based on a constant interest rate, but does not guarantee the actual return of any financial product. Markets can fluctuate, so it is worth diversifying and adjusting risk to your time horizon and investor profile.
How is the future value of periodic contributions calculated?
With the formula contribution — [(1 + r)^n ∑’ 1] / r, where r is the monthly interest rate and n the number of months. Each contribution earns interest for however long it has left until the end of the period, which is why earlier contributions end up worth more than later ones.
Why does inflation matter for this projection?
Because the calculator projects the nominal return, not the real return. If inflation is 3% and the nominal return is 5%, the approximate real return is only 2%, which is what actually matters for the future purchasing power of the capital.
Does monthly compounding give much more than annual compounding?
The difference is moderate: on €1,000 at 5% annual over 10 years with no contributions, monthly compounding gives €1,647.01 versus €1,628.89 with annual compounding. The effect grows the longer the time horizon.
What matters more for the final result: the amount contributed or time?
Time usually matters more than the amount contributed each month. Starting to invest a few years earlier, even with modest contributions, tends to generate more final wealth than starting later with larger contributions, because compound interest needs time to accelerate.
What is the difference between simple and compound interest in practice?
Simple interest always generates the same amount of interest each period, calculated on the initial capital. Compound interest reinvests the interest generated, which in turn produces new interest, so over the long run the final capital is noticeably higher with compound interest.
Does this calculator work for any savings or investment product?
It serves as a generic mathematical projection applicable to any product that compounds in a similar way (savings account, index fund, pension plan), but it doesn't replace the actual terms of each product nor guarantee that the entered interest rate will be achieved.