Compound Interest
What savings grow to, with optional monthly deposits.
About Compound Interest
Compound Interest projects what savings grow to over time, with optional monthly contributions and a choice of compounding frequency. The striking part is usually the split between what you put in and what the growth added — over long periods the interest exceeds the contributions, which is the whole argument for starting early.
How to use it
- Enter a starting amount, an expected annual return and a number of years.
- Optionally add a monthly contribution.
- Read the future value, total contributed and interest earned.
Questions
What return rate should I assume?
Historically a diversified stock index has returned roughly 7% a year after inflation, but with severe swings. Savings accounts are far lower. Be conservative — an optimistic rate makes the projection meaningless.
Does this account for inflation?
No. The figure is in today’s nominal terms. Subtract expected inflation from your return rate to see the result in real purchasing power.
Does compounding frequency matter much?
Less than people expect. Moving from yearly to monthly compounding at 7% adds about 0.2 percentage points a year. The rate, the amount and the time matter far more.
Compound Interest is free and runs entirely in your browser. No account, no upload, no watermark, no limit on use.