Compound Interest Calculator

What Is Compound Interest?

Compound interest means earning interest on both your original deposit and the interest you have already received. Simple interest is calculated only on the original amount, but with compound interest each period's interest is added to the balance, so the next period's interest is calculated on a larger sum. The longer the money stays invested, the faster it grows.

A simple example: €1,000 invested at 7% a year for 10 years. With simple interest you earn €70 a year and end with €1,700. With monthly compounding at the same rate you end with about €2,010, €310 more, purely because interest earns interest. Over 30 years the gap becomes large: simple interest gives €3,100, while monthly compounding gives about €8,100.

How to Use This Calculator

Enter your initial deposit, the lump sum you invest today, and your monthly contribution, the amount you plan to add regularly. Even €50 or €100 a month grows into a meaningful sum over a decade. Enter the annual interest rate or expected return: use the rate your bank actually pays for a savings account, or around 6–8% a year for a broadly diversified equity fund, which is close to the long-run historical average before inflation. Set the time period in years, choose the compounding frequency, and click Calculate.

The result shows the projected future value, split into the money you paid in yourself and the interest earned. The difference between the two is the effect of compounding: money that required no extra effort from you.

Does Compounding Frequency Matter?

Interest can be added yearly, quarterly, monthly or daily. More frequent compounding gives a slightly higher result, because interest starts earning interest sooner. In practice the difference is small: on €10,000 at 7% for 10 years, daily compounding gives only about €40 more than monthly compounding. The interest rate, the time and the regularity of your contributions matter far more.

Why Regular Contributions Matter So Much

Many people focus on finding a slightly better interest rate, when the most powerful variable is often how much they add each month. Compare two savers over 20 years at 7%. The first invests €20,000 at the start and adds nothing. The second invests only €1,000 at the start but adds €200 every month. After 20 years the first has about €77,000 and the second about €108,000, even though the second paid in only €49,000 in total. Steady monthly saving is the engine of long-term wealth.

Frequently Asked Questions

What interest rate should I use?

For a bank savings account, use the rate your bank currently offers. For a broadly diversified equity index fund, 6–8% a year reflects the long-term historical average, although returns vary a lot from year to year and past results do not guarantee future ones. For cautious planning, try a lower rate as well.

Does the calculator account for inflation?

No, the result is in nominal euros. To see the result in today's purchasing power, subtract the expected inflation rate from the return before you enter it. If you expect 7% returns and 2% inflation, enter 5%.

How accurate is the result?

The calculation uses standard financial mathematics and is exact for a fixed rate. Real investment returns go up and down, so the result is a projection based on steady inputs, not a guarantee.

Can I use it for a pension or retirement fund?

Yes. Enter your current balance as the initial deposit, your monthly contribution and your expected return. For a calculation that works backwards from a target amount, use the Retirement Savings Calculator.

How to Get the Most From Compound Growth

Start as early as you can, because every extra year of compounding counts. Automate your saving so that it happens without relying on willpower. Reinvest interest and dividends instead of spending them; the Dividend Calculator shows how much difference this makes. Keep costs low: at a 7% return, a 1% yearly fee reduces the final value of a lump sum by about a quarter over 30 years. And avoid withdrawing early, because breaking the chain of compounding is the most expensive mistake a long-term saver can make.