Compound Interest Tool
Estimate the future value of an investment with configurable compounding, recurring contributions and annual contribution increases. Compare total deposits with investment gains, account for estimated taxes and management fees, and explore inflation-adjusted results through charts and annual tables.
| Year | Invested | Growth | Balance |
|---|
Illustrative estimate, not a guaranteed return. Assumes a constant annual rate, regular contributions and tax on positive returns. Inflation-adjusted figures are in today's purchasing power.
Table of Contents
Highlights
- Compare annual, monthly, daily and continuous compounding.
- Model recurring contributions with adjustable timing and frequency.
- Include annual contribution increases, estimated tax and management fees.
- View inflation-adjusted balances and investment gains.
- Explore interactive growth charts and year-by-year breakdowns.
How Compound Interest Tool Works?
Compound interest adds returns to the balance so future returns can accrue on earlier returns. For an initial investment only, with no fees or tax and a constant nominal annual rate, discrete compounding follows:
Here, P is the initial investment, r the annual rate as a decimal, m the number of compounding periods per year and t the duration in years. For continuous compounding, the corresponding idealised formula is:
Recurring contributions are incorporated on their scheduled dates, either at the beginning or end of each contribution period. Contributions can rise each year by the specified annual percentage. The model processes compounding events and contributions chronologically, deducts estimated tax on positive interest at each accrual event, and applies management fees proportionally over elapsed time. For discrete compounding, interest is credited at selected compounding dates; for continuous compounding, return accrues between events. The inflation-adjusted ending balance is:
Here, i is assumed annual inflation. The displayed total invested includes the initial investment and all scheduled contributions. Investment gain is final balance minus total invested, so it reflects both investment performance and deducted costs. A chart and year-by-year table show deposits, net gains and balances; total estimated taxes and fees are shown separately.
| Setting | Available options |
|---|---|
| Compounding | Annual, half-yearly, quarterly, monthly, fortnightly, weekly, daily (365/year), continuous |
| Contributions | Annual, half-yearly, quarterly, monthly, fortnightly, weekly; beginning or end of period |
| Further assumptions | Annual contribution growth, inflation, tax on positive returns and annual management fees |
Practical Use Cases
Long-term savers: Estimate how a starting balance and regular deposits might accumulate over 10, 20 or 30 years, and compare saving more each month with investing for longer.
Retirement planners: Explore future account balances under different assumed returns and inflation rates, then consider the inflation-adjusted value of the projected sum.
Parents saving for education: Model an initial gift, periodic contributions and planned annual contribution increases towards a future education fund.
Individual investors: Compare how different compounding schedules, expected returns, estimated investment fees and taxes affect ending balances and cumulative gains.
Financial educators: Demonstrate compound growth visually with annual balances, contributed capital and net gains, including the impact of contributing at the start rather than the end of a period.
Accuracy and Limitations
Results follow the stated inputs and use a constant annual return, fixed compounding schedule and evenly spaced contributions, with contribution changes applied annually. Tax is an estimate deducted only from positive accrued interest, not a simulation of jurisdiction-specific tax bands, realised capital gains, allowances or tax-loss offsets. Management fees are modelled proportionally through time rather than from an actual provider fee schedule. Inflation is assumed constant, and the inflation-adjusted figure discounts the final balance rather than each deposit separately. Market volatility, transaction costs, irregular cash flows and actual investment performance are not modelled. Annual table figures may show small rounding differences from underlying calculations; forecasts are illustrative, not guaranteed.
