Scope
Assumptions and limits
This is an educational projection, not investment, tax or financial advice. Actual returns, fees, taxes and product conventions can differ.
Results use the values you enter and the conventions described in the methodology below. After calculating, review the result-specific assumptions and warnings shown with the estimate.
Explore money and debt tools for related tasks in this collection.
01
How compound interest works
For a lump sum, future value is P × (1 + r ÷ n)n×t. P is the starting principal, r is the nominal annual rate, n is the number of compounding events per year and t is time in years. Regular contributions are added through a deterministic monthly event schedule.
Beginning-of-period contributions are added before that month's compounding event; end-of-period contributions are added afterward. Real investments may price daily, charge fees or deliver variable returns, so this is a projection rather than a guarantee.
02
Contributions versus growth
A final balance contains the money you supplied and the estimated growth generated by the rate assumption. The calculator keeps those amounts separate so a large projected number cannot hide how much came from your own contributions.
At 7% nominal annual return compounded monthly, a starting 5,000 plus 500 at each month-end for 20 years projects to 280,657.02. Total money contributed is 125,000 and estimated growth is 155,657.02.
03
Inflation and limitations
Inflation-adjusted value divides nominal final value by (1 + inflation rate)years. It is a purchasing-power comparison; it does not remove money from the nominal balance.
The model excludes tax, platform fees, investment fees and changing returns. A negative rate above −100% is supported and may shrink the balance.
FAQ
Frequently asked questions
What is compound interest?
It is growth calculated on principal plus earlier accumulated growth.
Are returns guaranteed?
No. The annual return is a sensitivity assumption, not a forecast or recommendation.
Can I use rand, dollars, pounds or euros?
Yes. Currency changes formatting only; the formula is currency-independent.
Does it include fees or tax?
No. Add those separately when judging a real product.
Why does contribution timing matter?
A beginning contribution has one more opportunity to earn growth than an otherwise identical end contribution.
Sources
Method references and scope
Method: results come from tested code using the documented method and assumptions shown on this page.
Review owner: Great Future Product Engineering.
Method and content last reviewed: . Next review due: .