Compound Interest Calculator
Project how regular contributions may grow over time — fully hypothetical.
Annahmen
Projected future value
—
Total you contribute
—
Hypothetical growth
—
Balance vs contributions (hypothetical)
Simuliertes Ergebnis| Year | Contributions | Balance |
|---|
Assumes monthly contributions and monthly compounding at a constant rate. Real returns vary and can be negative.
Compound interest is the snowball effect of earning returns on both your original money and the returns it has already generated. This calculator simulates growth with a fixed, hypothetical annual rate so you can see why time in the market matters more than timing it.
How compounding works
With simple interest you only earn on the principal. With compound interest, each period’s earnings are added to your balance, so future earnings grow on a larger base. The balance follows B = P(1 + r/n)^(nt), where P is principal, r the annual rate, n compounding periods per year, and t years.
Because growth is exponential, the early years look slow and the later years accelerate dramatically. Doubling the time horizon often does more for the final balance than doubling the contribution.
The role of regular contributions
Adding money every month — even a modest amount — introduces a second compounding stream. Contributions made early have longer to compound, which is why automating savings at payday is one of the highest-leverage habits you can build.
Use the monthly contribution slider to compare scenarios. Remember these are hypothetical figures, not predictions of how any real investment will perform.
Risk, inflation, and real returns
A nominal rate is not the same as a real return. If investments return 7% in a year with 3% inflation, purchasing power grows by roughly 4%, not 7%. Fees and taxes reduce results further.
No asset grows at a constant rate. Real returns fluctuate, and you may lose principal. Diversification, an emergency fund, and understanding your risk tolerance come before chasing a higher number.
Calculator FAQ
Is the 7% default rate guaranteed?
No. It is a widely used hypothetical illustration based on long-run historical averages of broad, diversified equity markets in some countries. Past performance does not predict future results, and actual returns vary substantially.
How often should I contribute?
Mathematically, more frequent contributions compound slightly better, but consistency matters far more. Choose a schedule you can automate — monthly after payday works well for most people.
Does this calculator recommend any investment?
No. AILICAI is an education and planning tool, not an investment adviser. It shows generic math with hypothetical rates and never suggests specific securities, funds, or target prices.
Why is my final number lower after inflation?
Inflation erodes purchasing power. Switch to a real (inflation-adjusted) rate, roughly nominal rate minus inflation, to estimate future money in today’s dollars.