Compound interest calculator

How to use the calculator

Just enter your own values above – either directly in the number field or via the slider: your starting capital (if you've already saved something), your planned monthly contribution, the expected return per year and the duration in years. The result on the right – final balance, capital contributed and interest earned – updates instantly with every change, so you don't have to click any button.

Under "Advanced options" you can additionally set how often interest is credited to your capital (compounding) and whether your contribution should rise by a fixed percentage each year (dynamic increase) – handy if you want to factor in annual salary increases, for example. Hover over a bar in the chart and a tooltip shows you the exact split between contributions and interest for that year.

What is compound interest?

With compound interest, interest is credited not only on the capital you paid in, but also on the interest already received in previous years. As a result, your wealth doesn't grow linearly over time but increasingly faster – the longer your money is invested, the larger the share that the interest itself contributes to the growth.

That's exactly what the calculator above shows: in the first few years your wealth consists almost entirely of your own contributions. Over the years, the share of interest in your total wealth keeps growing – that's the real lever in long-term wealth building. Albert Einstein is said to have once called compound interest the "eighth wonder of the world" – whether the quote really comes from him is historically disputed, but the effect itself is real and mathematically clearly provable.

The compound interest formula, simply explained

Without a monthly contribution, compound interest for a one-off investment can be calculated with a simple formula:

K = K₀ × (1 + p / 100)ⁿ

Here K is the final capital, K₀ the starting capital, p the annual interest rate in percent and n the number of years. As soon as regular contributions are added, this simple formula is no longer enough, because each individual contribution has a different amount of time to earn interest. That's why this calculator doesn't use the simple formula but simulates your contribution month by month: each month your contribution is added, and interest is credited proportionally on the current balance – across the entire duration.

Which factors influence your result the most?

Four levers determine how strongly compound interest works out in the end:

• Duration: by far the most important factor. Since interest is earned on interest, every additional year of investment has a disproportionate effect – especially in the second half of the period.
• Return: even small differences in the annual interest rate add up over many years to a large difference in the final capital.
• Contribution: the more you set aside each month, the larger the base on which compound interest can act in the first place.
• Dynamic increase: a contribution that rises each year (e.g. in line with salary increases) can noticeably boost the final result, without being very noticeable at the start.

Feel free to try it out in the calculator above: increase just the duration by 5 years and see how much the final capital changes as a result – usually significantly more than you'd expect at first glance.

Compound interest with a savings plan, e.g. with ETFs

The classic use case for this calculator is a monthly savings plan, for example into a broadly diversified ETF. Instead of a fixed interest rate as with a savings account, the return on securities does fluctuate from year to year, but over very long periods long-term average returns can historically be observed. The calculator deliberately works with a constant return that you can choose freely – that makes the calculation easy to follow, but hides the real fluctuations of individual years.

Compound interest and inflation

Important to know: the return calculated here is nominal, i.e. before deducting inflation. If prices rise by an average of, say, 2% per year, the real purchasing power of your final capital falls accordingly. If you want a more realistic estimate of your actual purchasing power at the end of the period, you can also enter an inflation-adjusted (real) return directly in the return field instead of the nominal one.

Common mistakes in long-term wealth building

A few things that often slow down compound interest in practice:

• Starting too late: since duration is the strongest lever, every year of delay costs a disproportionate amount of final capital.
• Selling in between: those who exit during price drops often miss exactly the recovery phases that make up the average return over time.
• Underestimating fees: ongoing costs act over many years like a negative compound interest component and noticeably reduce the final capital.
• Never raising the contribution: those who never adjust their contribution to rising income leave part of the possible effect unused – that's exactly what the dynamic-increase option in the calculator is for.