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Compound Interest Calculator
Enter a starting amount, what you add each month, and an assumed annual return. The calculator projects the balance, splits it into money you put in versus growth, and shows the year-by-year path. The methodology below spells out every assumption — read it before trusting any long-range number, here or anywhere else.
Final balance
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Total contributed
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Growth
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Growth share of balance
Balance Contributed
Year-by-year table
| Year | Contributed (cumulative) | Growth | Balance |
|---|
Methodology
The projection is a straightforward month-by-month simulation — no curve fitting, no Monte Carlo, no hidden factors:
- Each month, the balance grows by one month's return, then the monthly contribution is added (contributions land at the end of the month, so a contribution earns nothing in the month it arrives — the conservative convention).
- If a contribution increase is set, the monthly contribution steps up once a year, at the start of each new year.
- The "growth" figure is simply the final balance minus everything you put in — it is the compounding, isolated.
The two meanings of "7% a year" — and why the toggle exists
Most calculators quietly divide your annual rate by 12 and compound that monthly. That treats the rate as a nominal rate, and it slightly overstates the outcome: 7% nominal compounded monthly is actually about 7.23% a year. When people quote long-run index returns ("the S&P returned about 7% real"), they almost always mean the effective annual figure — the CAGR. So this calculator defaults to treating your input as effective annual and converts it to the equivalent monthly rate ((1 + r)1/12 − 1). If you specifically want the nominal convention — say, to match a bank product quoted that way, or another calculator — switch the toggle. Over 25 years the difference on the defaults is real money; try it.
What this projection ignores (deliberately)
- Inflation. Every figure is in today's-dollars-become- tomorrow's-dollars nominal terms — unless you enter a real (inflation-adjusted) return, in which case the output is in today's purchasing power. Entering ~7% real for a global equity portfolio and reading the result as "today's money" is the cleaner mental model.
- Taxes and fees. Account wrappers (ISA, 401(k), NISA, MPF), dividend withholding, platform fees, and fund TERs all change the realized rate. Subtract your all-in cost from the return you enter.
- Sequence and volatility. A smooth 7% every year and a volatile path averaging 7% end at the same place only if you never add or remove money. With ongoing contributions the path matters (you buy more when markets are down); a single-rate projection is a central estimate, not a promise.
Worked example
Defaults: $10,000 start, $500/month, 7% effective annual, 25 years. The monthly rate is (1.07)1/12 − 1 ≈ 0.565%. After 300 months of grow-then-contribute, the balance is about $446,000, of which $160,000 is contributions ($10,000 + 300 × $500) and roughly $286,000 — about 64% of the final balance — is compounding. That share rising over time is the entire argument for starting early.