Balance after 20 years
$102,060
- Total you paid in
- $53,000
- Growth earned
- $49,060
- In today's money (at 2.5% inflation)
- $62,285
- Cost of the annual fee over the period
- $6,899
- How much lower the final balance is because of the fee.
Year-by-year table
| Year | Paid in | Growth | Balance |
|---|---|---|---|
| 1 | $7,400 | $343 | $7,743 |
| 2 | $9,800 | $841 | $10,641 |
| 3 | $12,200 | $1,502 | $13,702 |
| 4 | $14,600 | $2,336 | $16,936 |
| 5 | $17,000 | $3,352 | $20,352 |
| 6 | $19,400 | $4,561 | $23,961 |
| 7 | $21,800 | $5,973 | $27,773 |
| 8 | $24,200 | $7,600 | $31,800 |
| 9 | $26,600 | $9,454 | $36,054 |
| 10 | $29,000 | $11,547 | $40,547 |
| 11 | $31,400 | $13,894 | $45,294 |
| 12 | $33,800 | $16,509 | $50,309 |
| 13 | $36,200 | $19,406 | $55,606 |
| 14 | $38,600 | $22,602 | $61,202 |
| 15 | $41,000 | $26,114 | $67,114 |
| 16 | $43,400 | $29,958 | $73,358 |
| 17 | $45,800 | $34,155 | $79,955 |
| 18 | $48,200 | $38,723 | $86,923 |
| 19 | $50,600 | $43,684 | $94,284 |
| 20 | $53,000 | $49,060 | $102,060 |
This calculator is for general information and illustration. It is not financial, investment, tax or legal advice and it cannot know your circumstances. Investment returns are never guaranteed and values can fall as well as rise. For decisions that matter, speak to a qualified professional in your country.
The short answer
Compound interest means you earn growth on your earlier growth as well as on what you paid in. Enter a starting amount, a monthly contribution, an assumed annual return and a number of years to see the projected balance. The result is an illustration based on your assumption, not a forecast, because real returns vary and can be negative.
Worked example
These are the example values loaded into the calculator above, run through exactly the same formulas, so you can check the method against your own numbers.
| Inputs | |
|---|---|
| Starting amount | $5,000 |
| Monthly contribution | $200.00 |
| Assumed annual return | 6.0% |
| Years | 20 |
| Annual fee | 0.5% |
| Assumed inflation | 2.5% |
| Results | |
|---|---|
| Total paid in | $53,000 |
| Final balance | $102,060 |
| Growth earned | $49,060 |
| In today's money | $62,285 |
| Cost of the annual fee | $6,899 |
Compounding is the reason small, regular contributions can grow into something substantial over long periods, and also the reason ordinary-looking fees can cost so much. This calculator lets you see both effects. It projects a balance from a starting amount and monthly contributions, then shows what fees and inflation do to it.
This tool illustrates a scenario. It does not predict returns. The growth rate is your assumption, and real investments can rise and fall, sometimes sharply.
How to use this calculator
- Enter your starting amount, which can be zero.
- Enter what you plan to contribute each month.
- Enter an assumed annual return. Try a cautious figure as well as an optimistic one.
- Set the number of years.
- Choose how often growth is compounded.
- Enter an annual fee, such as fund and platform costs.
- Enter an assumed inflation rate to see the result in today's money.
The formula
For a lump sum with no contributions and compounding n times a year, the balance after t years is:
- Balance = starting amount × (1 + rate ÷ n) ^ (n × t)
With regular monthly contributions, the calculator works month by month. Each month it grows the balance by the monthly equivalent of your stated rate, applies the monthly share of the annual fee, and then adds the contribution at the end of the month. When compounding is monthly and there is no fee, this matches the standard annuity formula exactly, and the calculator is tested against it. For example, 10,000 at 7% compounded monthly for 10 years grows to about 20,097.
The real balance divides the final figure by (1 + inflation) raised to the number of years. The cost of the fee is the difference between the final balance with and without the fee.
What compounding actually does
In the early years, most of the balance is your own money, and growth looks modest. Later, growth on earlier growth begins to outweigh new contributions. This is why the chart bends upward and why the year-by-year table shows growth accelerating. It is also why starting earlier and contributing consistently matter more than any single clever choice.
The flip side is that compounding is slow. A short time horizon leaves little room for it to work, and expecting rapid results from it leads people towards riskier and riskier investments. If you need money within a few years, the honest answer is that compounding will not carry much of the load.
The effect of fees
Fees are the part of investing you can control. Because a yearly fee is deducted from the balance, it reduces the base that future growth applies to. Try the calculator with a fee of zero, then with one percent, and compare the final balance. The difference over twenty or thirty years is often larger than people expect. Our guide to investment apps explains how to compare total costs before choosing a provider.
The effect of inflation
A large number decades from now is not the same as a large number today. The "in today's money" line gives a rough sense of purchasing power. It uses a single steady inflation rate, which is a simplification, but it is a useful check against being dazzled by big nominal figures.
How to read your result
Treat the output as one scenario among many. Run it with a lower return than you hope for, and see whether the outcome still works for your goal. If a plan only works at a high assumed return, it is fragile. A sturdier plan works reasonably at modest returns and treats anything above that as a bonus. Also notice how much comes from your contributions and how much from growth: in shorter periods, contributions dominate, which is a reminder that saving rate matters more than return early on.
Common mistakes
Assuming a high return. Optimistic assumptions make plans look better than they are.
Ignoring fees and inflation. Both reduce what you end up with in real terms.
Assuming returns are smooth. Real markets are volatile, so the path will not be a clean curve.
Confusing this with a savings account. Savings interest is typically much lower and more certain than long-run investment returns, and the risks differ. Enter an assumption that fits what you actually hold.
Investing money you may need soon. Short-term needs should not depend on market growth.
Assumptions and limits
The calculator assumes a constant rate, constant contributions and a constant fee. It ignores tax on growth, changing contributions, market crashes, currency movements and the effect of withdrawals. It does not know your country's tax rules or account types. This page is general information, not financial advice. To think about where investing fits alongside other income, read our guide to investing for beginners and our comparison of active and passive income.
Frequently asked questions
How is compound interest calculated?
The balance grows each period by the periodic rate, and any contribution is then added. Over many periods this compounds, because each period's growth is calculated on a larger balance. For a lump sum with no contributions, the balance is the starting amount times one plus the rate divided by the compounding frequency, raised to the number of periods.
What return should I assume?
There is no correct number, because future returns are unknown and depend on what you invest in. Try several values, including low ones, to see how sensitive the result is. Do not treat a high assumed return as a promise, and be sceptical of anyone who quotes steady high returns with no risk.
Why does the fee input matter so much?
A yearly percentage fee is taken from the balance every year, so it compounds against you just as growth compounds for you. Over decades, a fee that looks small can remove a substantial share of the final amount. The calculator shows the cost of the fee over your chosen period.
What does the inflation figure do?
It shows the projected balance in today's purchasing power. Prices tend to rise over time, so a future amount buys less than the same amount today. Entering an inflation assumption converts the final balance into today's money, which is often a more honest picture of what it could be worth.
How we keep this calculator accurate
The formulas on this page are standard arithmetic, written out in full above so you can check them. Each one is covered by automated tests that compare the calculator against independently worked examples and round-trip checks, and the worked example is generated by the same code as the calculator. We use no third-party data, exchange rates or fee tables, because those go stale; fees and rates are always numbers you enter. If you spot a mistake or an assumption that does not fit your situation, please tell us. Our earnings disclaimer and editorial approach explain how the site works.
Written by
The editorial team behind How To Make Money Online, responsible for researching, writing, and fact-checking every guide on this site against current platform terms and fees.