Compound interest calculator

Starting capital (€)

Regular contribution (€)

How often you contribute Every month Every quarter Every six months Every year

Annual return (%)

For (years)

Compounded Every day Every month Every quarter Every six months Every year

Calculate Back to the example

How it grows year by year

The bottom band is the money you have put in, which rises in a straight line. The one on top is the interest. Watch where they start to pull apart: that is where compound interest begins to count for more than the saving.

Year by year

What compound interest is

Simple interest always earns on the same amount: you put in €1,000 at 7% and collect €70 every year, always 70. Compound interest earns on the capital and on the interest that capital has already generated. In the second year you do not collect 70 on 1,000, but 70 on 1,070. In the third, on 1,144.90.

The difference looks small, and for the first few years it is. What makes it enormous is time. In this calculator's default scenario, after five years the interest is a modest fraction of the total; after twenty, it counts for more than everything you have been putting in. That is why the practical conclusion is not 'look for a higher return', but start earlier and do not interrupt it.

The formula, term by term

With capital that is left alone, the future value is:

FV = C × (1 + r/m)^{m × t}

• C — the starting capital.
• r — the annual return as a decimal: 7% is 0.07.
• m — how many times a year the interest is compounded.
• t — the years.

When you also contribute every month, you have to add the future value of those contributions, which is an annuity: A × ((1 + i)ⁿ − 1) / i, where i is the effective rate of the period in which you contribute and n the number of contributions. This calculator does both things and adds them up. When contributing and compounding do not run at the same pace —contributing every month with daily compounding, for example— it moves the rate to the contribution period with i = (1 + r/m)^m/p − 1.

Explicit assumption: contributions are treated as made at the end of each period. That is why the last contribution generates no interest; it has only just gone in.

How often the interest is compounded

The more often it is compounded, the sooner the interest starts generating interest. But the effect is far smaller than people usually think: in the default scenario, going from annual to daily compounding moves the result by around 1%. Change the dropdown yourself and look at it. What really moves the figure are the return and, above everything else, the years. One more point of return, or five more years, count for far more than the compounding frequency.

Compound interest and cryptocurrencies

This calculator assumes a constant return. A deposit or a fund can reasonably resemble that; a cryptocurrency cannot. The price of a crypto-asset can multiply or go to zero, and there is no guaranteed rate you can put in the return box.

There are products in the sector that do pay a periodic yield —the staking of proof-of-stake networks, or crypto-asset lending— and there compound interest works the same way: if you reinvest what you collect, the base grows. But that yield is paid in the coin itself, so you can end up with more units of something that is worth less. And with lending there is the added risk that whoever pays you stops existing.

If you still want to use it to get an idea, the honest way is to try several scenarios —including one with a negative return— instead of keeping the best one. You can see the real market data on crypto market cap, the full listing on all cryptocurrencies, and the vocabulary in the glossary.

Common mistakes when using a calculator like this

• Confusing the nominal return with the AER. The box in this calculator is the nominal annual rate; the AER —the Spanish TAE— already includes the effect of compounding. If you enter an AER and then also pick monthly compounding, you are counting the same thing twice.
• Forgetting inflation. €56,000 twenty years from now does not buy what it buys today. To reason in real terms, subtract the inflation you expect from the return you enter.
• Forgetting tax and fees. The result is gross. A 1% annual fee sounds like nothing and, compounded over twenty years, takes a very visible slice of the final pile: try it by subtracting it from the rate.
• Taking a projection for a forecast. This is arithmetic on assumptions you choose yourself. It predicts nothing.

Frequently asked questions

What is compound interest?

It is the interest worked out on the starting capital and also on the interest that capital has already generated. Unlike simple interest, which always earns on the same amount, here the base grows every period, and that is why the curve gets steeper as time goes by.

What is the compound interest formula?

For capital with no contributions, FV = C x (1 + r/m)^(m x t), where C is the starting capital, r the annual rate as a decimal, m the number of compounding periods per year and t the years. When there are regular contributions you add the future value of the annuity: A x ((1 + i)^n - 1) / i, with i the effective rate of the contribution period.

How often should the interest be compounded?

The more often the better for the investor, but the difference is smaller than it looks. In this calculator's default scenario, going from annual to daily compounding changes the result by around 1%. What really moves the figure are the rate and, above all, the years.

Is this calculator any use for cryptocurrencies?

It is useful for understanding how an investment would grow at a constant rate, but cryptocurrencies have no guaranteed rate: their price can rise or fall without limit and you can lose all your money. A fixed percentage applied to a crypto-asset is an assumption, never a forecast.

Does the result take tax and inflation off?

No. The figure is nominal and gross: it does not subtract savings tax or the loss of purchasing power. If you want an estimate in real terms, subtract the inflation you expect from the rate you enter; with a 7% return and 2% inflation, enter 5%.

This calculator is a calculation tool, not an investment recommendation and not an advisory service. The results are deterministic projections built from the assumptions you enter and they guarantee no future return. Cryptocurrencies are a volatile asset, not covered by the deposit guarantee fund, and you can lose all the money you invest. You can read our financial disclaimer.

And be warned: there is tax to pay on the gains. If you sell cryptocurrencies at a profit, work out what you owe with the crypto tax calculator, which applies the compulsory FIFO method.