What is compound interest?

Compound interest is growth earned on previous growth. Each period's return is added to the balance, so the next period's return is calculated on a larger amount. Over long periods the growth on growth can exceed the money you put in.

What formula does the calculator use?

For a lump sum, the future value is P × (1 + r/n)^(n×t), where P is the starting amount, r the annual rate, n the number of compounding periods a year and t the number of years. Monthly contributions are added each month and compound from then on. The calculator runs this month by month so it can include fees, rising contributions and inflation.

How much do fees matter?

More than they look. A fee is charged on the whole balance every year, so it also removes the growth that money would have earned. The calculator shows the lifetime cost of fees as the difference between the final balance with and without them.

What is the inflation-adjusted value?

It is the final balance expressed in today's money. At 2.5% inflation, prices roughly double in 28 years, so a nominal balance buys about half as much by then.

Is the return guaranteed?

No. The annual return here is a hypothetical, constant rate. Real investments rise and fall from year to year, and the order of returns affects the result when you are adding or withdrawing money.

Tools › Compound interest calculator

Compound Interest Calculator

See how an investment grows with regular contributions, what fees cost you over the years, and what the result is worth in today's money. All returns are hypothetical.

Final balance after 25 years$626,734

Total contributed: $200,000
Total growth: $426,734
In today's money: $338,055
Lifetime cost of fees: $64,572

Investing $50,000 plus $500 a month for 25 years at a hypothetical 7.0% a year, after a 0.50% annual fee, grows to $626,734. You would put in $200,000 and growth would add $426,734. Fees would cost $64,572 over the period, including the growth those fees would have earned. In today's money, assuming 2.5% inflation, the final balance is worth about $338,055.

ContributionsGrowth

Year-by-year table

Year	Contributed	Growth	Balance	Today's money
1	$56,000	$3,528	$59,528	$58,076
2	$62,000	$7,694	$69,694	$66,336
3	$68,000	$12,541	$80,541	$74,790
4	$74,000	$18,113	$92,113	$83,450
5	$80,000	$24,460	$104,460	$92,328
6	$86,000	$31,633	$117,633	$101,435
7	$92,000	$39,688	$131,688	$110,785
8	$98,000	$48,684	$146,684	$120,390
9	$104,000	$58,683	$162,683	$130,265
10	$110,000	$69,753	$179,753	$140,423
11	$116,000	$81,966	$197,966	$150,879
12	$122,000	$95,397	$217,397	$161,647
13	$128,000	$110,129	$238,129	$172,744
14	$134,000	$126,249	$260,249	$184,185
15	$140,000	$143,849	$283,849	$195,988
16	$146,000	$163,028	$309,028	$208,169
17	$152,000	$183,893	$335,893	$220,747
18	$158,000	$206,556	$364,556	$233,741
19	$164,000	$231,137	$395,137	$247,169
20	$170,000	$257,765	$427,765	$261,053
21	$176,000	$286,577	$462,577	$275,412
22	$182,000	$317,718	$499,718	$290,269
23	$188,000	$351,345	$539,345	$305,646
24	$194,000	$387,625	$581,625	$321,566
25	$200,000	$426,734	$626,734	$338,055

How compound growth works

Compounding means returns earn returns. In the early years most of the balance is money you put in; later, growth on past growth takes over. That is why time in the market usually matters more than the size of any single contribution.

Two things quietly work against it: fees, which are taken from the whole balance every year, and inflation, which reduces what the final amount buys. This calculator shows both.

Formula

Lump sum: FV = P × (1 + r/n)^n×t
Monthly contributions (end of month, monthly compounding): FV = C × [(1 + r/12)^12t − 1] ÷ (r/12)

The calculator simulates each month: it adds contributions, applies growth at the rate equivalent to your compounding frequency, then deducts one-twelfth of the annual fee. The real value divides the final balance by (1 + inflation)^years.

Worked example

This is Step 3 of The MacroInsight Process: the core portfolio. The long-term core, built to compound quietly for years.