Compound interest calculator

Over ten years of regular saving, most of the final figure is still your own contributions. Over thirty, growth usually overtakes them. The crossover point is the single most useful thing this shows, and it's later than most people assume.

Save 200 a month for ten years at 7% and you'll have put in 24,000 and hold around 34,600. Do the same for thirty years and you've put in 72,000 and hold around 244,000. The contributions roughly tripled; the total went up sevenfold.

Why the shape is so lopsided

Growth is earned on everything already there, including previous growth. So the amount added each year keeps rising even though your contribution doesn't.

In year one, 7% of a small balance is a small number. In year thirty, 7% of a large balance can exceed everything you put in that year. Nothing changes about the rate; the balance it applies to is what changed.

That's why the chart is nearly flat at the start and steep at the end, and why starting earlier beats saving more later. Ten years of head start is usually worth more than a substantially larger monthly amount.

What this leaves out, and all of it is real

Inflation. The biggest omission. A figure thirty years out is in future money, which buys less. At 3% inflation, 244,000 in thirty years has roughly the purchasing power of 100,000 today. If you want a figure in today's money, subtract inflation from your rate: use 4% instead of 7% and read the result as current purchasing power.

Fees. A 1% annual charge does not cost you 1%. It compounds against you the same way growth compounds for you, and over thirty years it can take a fifth or more of the final figure. The difference between a 0.2% index fund and a 1.2% managed one is enormous over decades, which is the argument for low-cost funds in a sentence.

Tax. Depends entirely on the account and the country. A tax-sheltered account and a taxable one produce different outcomes from identical investments.

Sequence. This assumes a steady rate, and real returns are nothing like steady. Two portfolios averaging the same return can end up far apart depending on when the bad years fell, particularly if you're withdrawing.

The rate to use

Long-run global stock market returns have historically been somewhere around 7% a year after inflation, which is where that number in examples comes from. The past is not a promise, and the figure hides decades that were much worse.

For savings accounts, use the actual rate you're being offered and expect it to change.

Modelling two or three rates is more honest than modelling one. Run 4%, 7% and 10% and treat the spread as the answer rather than any single line.

Why the number is optimistic

It assumes you never stop, never withdraw, never miss a month, and the rate holds for the whole period. Real life includes job changes, emergencies, and the strong temptation to sell after a bad year.

The arithmetic is right. The behaviour it assumes is the hard part, and it's the part that actually determines the outcome.

What it's genuinely useful for

Comparing scenarios rather than predicting a number. Whether an extra 50 a month matters over twenty years. Whether starting five years earlier is worth more than saving 20% more. What a 1% fee costs across a working life.

Those comparisons are robust even when the absolute figure isn't, because the same assumptions apply to both sides.

Not advice

This is arithmetic. It knows nothing about your circumstances, your tax position or your risk tolerance, and a calculator showing a large number is not a reason to do anything. For decisions of any size, a qualified adviser is worth the fee.

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