Inflation shows your balance in today’s purchasing power. Raising the contribution each year models pay rises that let you invest a little more over time.
Assumes a fixed annual return compounded at the selected frequency, with contributions added at the end of each month. Real markets vary year to year and can fall as well as rise — this is an educational projection, not a forecast or financial advice.
Put this to work with real holdings
A fixed rate is a useful sketch — your real portfolio is messier and more interesting. Create a free Kapio account to track actual stocks and ETFs, get an AI analyst read on your risk, and run a Monte-Carlo projection on real historical returns.
See this with your real portfolio
Swap the fixed rate for actual historical returns: open the portfolio builder to model real stocks and ETFs with a Monte-Carlo projection and an AI risk read.
What is compound interest?
Compound interest is interest earned on both your original principal and on the interest you have already accumulated. Unlike simple interest, which only ever applies to the principal, compounding creates a snowball effect: each period your base grows, so the next round of growth is calculated on a larger number. Over short spans the difference is modest, but over decades it becomes the single most powerful force in long-term investing.
How to use this calculator
Enter your starting amount, the annual return you expect, how much you plan to add each month, and your time horizon in years. Pick how often interest compounds — for most diversified investments monthly is a fine approximation. Open the advanced options to view your balance in inflation-adjusted terms, or to model contributions that rise a little each year as your income grows. Everything recalculates instantly, and you can share a result just by copying the page URL.
The Rule of 72
A quick mental shortcut: divide 72 by your annual return to estimate how many years it takes to double your money. At 8% your money doubles roughly every nine years; at 6% it takes about twelve. The rule works because compounding is exponential — the longer you stay invested, the more dramatic each doubling becomes.
Why monthly contributions matter
Regular contributions are often more powerful than a larger lump sum, because every dollar you add buys more time in the market. Adding $500 a month at 8% for 30 years means contributing around $180,000 of your own money — but ending with well over $700,000 once compounding does its work. Starting early with small amounts almost always beats starting late with large ones.
Frequently asked questions
What return should I use?
For a diversified stock portfolio, 7–10% is a reasonable long-run historical average before inflation. Savings accounts are typically 3–5%, bonds 4–6%. For an inflation-adjusted (real) view, either lower the rate by 2–3% or use the inflation field in advanced options.
Compound vs simple interest?
Simple interest is calculated only on your original principal. Compound interest is calculated on the principal plus everything earned so far, so it accelerates. A fixed $10,000 at 8% simple interest earns $800 every year; compounded, it earns $800 the first year, $864 the next, and keeps climbing.
Does compounding frequency matter?
Less than most people think. Moving from annual to monthly to daily compounding adds only a little to the total. The return and the time horizon matter far more than how often interest is applied.
Is this accurate for real investments?
It assumes a fixed return, which is great for planning intuition but not how markets actually behave — real returns swing year to year. For a projection built on real historical returns and volatility, try the Kapio portfolio builder, which includes a Monte-Carlo simulation.