Compound Interest Calculator
Compound interest accelerates the growth of your money by reinvesting returns back into the total balance. Enter your figures below to see how investments grow over time and the amount of wealth you could earn in the future by investing today.
See How Compound Interest Grows Your Investments – Adjust the values to estimate your investment growth over time
In 10 Years You’ll Have
€130,098
By Year 10, your total contributions of €80,000 will have grown to €130,098. That's a pre-tax, pre-inflation return on investment of €50,098 or 62.62% in percentage terms. To achieve this outcome, your portfolio maintained an annual effective rate (AER) of 8.00%.
- Portfolio Value
- Total Invested
- Unrealised Gain/(Loss)
- €50,098
- Return on Investment
- 62.62%
- Annual Effective Rate
- 8.00%
Illustrative purposes only. Returns are not guaranteed and exclude taxes, fees and inflation. Investing involves a risk of loss.
Want to start earning better returns? Check out our ETF comparison tool to find the best funds for beginners, historically proven to outperform the professionals over the long-term.
How This Calculator Works
Your Inputs
| Input | What it means |
|---|---|
| Initial Investment (€) | The lump sum you’ll invest today. A larger starting amount means greater compounding from day one. |
| Monthly Contribution (€) | The extra money you’ll invest each month. If you don’t plan on investing anything further, leave this at zero. |
| Investment Period (Years) | The length of time that you’ll invest for. Time has a huge impact on your final results. The earlier you start, and the longer you stay invested, the greater the effects of compound interest. See for yourself how much extra you could earn by staying invested for longer. Spoiler: it becomes exponentially larger! |
| Compound Frequency | How often returns are added back into your balance. The higher the frequency, the better the results. We recommend daily compounding for investment simulations. |
| Annual Return (%) | The yearly growth rate you expect your investment to generate. This is the most sensitive input in the calculator. A small change here produces a large difference in the final balance over long periods. You can select a preset return from the dropdown or enter a custom figure. |
Understanding Your Results
Results are displayed as a chart by default. Switch to Table View to see your results broken down year-by-year.
| Result | What it means |
|---|---|
| Portfolio Value (Green) | Your total projected balance at the end of the investment period. This is a combination of your initial investment, all of your monthly contributions and accumulated growth. |
| Total Invested (Blue) | Your initial investment and all of your monthly contributions, without any investment growth. |
| Unrealised Gain/(Loss) | The monetary return that your investments generated for you before taxes and inflation are taken into account. |
| Return on Investment | The percentage return that your investments generated for you before taxes and inflation are taken into account. |
| Annual Effective Rate (AER) | The real annualised growth rate of your money. AER takes your Annual Return (%) and adjusts it for the selected Compound Frequency. More frequent compounding will produce higher AERs. AER can be used when comparing results to other savings or investment opportunities. |
Assumptions of this Calculator
- The initial investment is made at the start of the first compound period. No return is earned at this point.
- Monthly contributions are grouped to match the compound frequency you select. If you select quarterly compounding, three months of contributions are added at each compound date.
- The annual return is converted to match the length of the compound period. The rates you enter are converted using a compound formula, not divided by the number of periods.
- The annual return is assumed to be constant across the full investment period. The calculator does not model market volatility or year-to-year variation in returns.
- Fees, taxes and inflation are not accounted for in the figures shown.
What is Compound Interest?
Compound interest is essentially growth on growth. Instead of only earning a return on your initial investment, the returns themselves are reinvested to start earning returns of their own. The effect can be small to begin with, but over time, the results can be staggering.
For example, an initial investment of €1,000 will grow to €1,050 over the course of a year at a 5% return. If the €50 gain is reinvested, then next year you’ll earn 5% on €1,050, not just the original €1,000.
This is the compounding effect in action. The larger the total balance, the greater each year’s return becomes. This creates a powerful snowball effect that causes investment values to grow at an accelerating rate over time.
Compound Interest vs Simple Interest
Simple interest means you only earn interest on the original amount you invested.
For example, if you put €5,000 into an account that offered you 4% worth of simple interest, you’d earn €200 every year. The amount never changes.
Over long horizons, the difference between simple interest and compound interest is stark. Here is how a €5,000 fixed sum performs at a 4% rate:
| Year | Simple Interest Balance | Compound Interest Balance |
|---|---|---|
| 1 | €5,200 | €5,200 |
| 5 | €6,000 | €6,083 |
| 10 | €7,000 | €7,401 |
As time goes on, the gap between the compound interest balance and simple interest balance widens.
Compound Interest Formula
Future Value = Start × (1 + Rate ÷ Periods)^(Periods × Years)
Where:
- Future Value = the money you’ll end up with
- Start = the money you begin with
- Rate = yearly return, as a decimal (5% → 0.05)
Periods = how frequently returns compound (daily = 365, monthly = 12, yearly = 1)
- Years = how long the money grows for
Example Compound Interest Calculation
If you invest €1,000 at a 5% annual return with monthly compounding over 10 years, then the formula looks like this:
Future Value = €1,000 x (1 + 0.05 ÷ 12)^(12 x 10)
Start = €1,000
Rate = 0.05
Periods = 12
Years = 10
So the exponent (‘^’) is 120. That gives a future value of approximately €1,647.
That’s a gain of €647 on a starting balance of €1,000, without putting in a single cent extra. The growth comes entirely from leaving the money in place and letting each month’s return get added to the balance before the next month’s return is calculated.
What This Calculator Does Not Include
Investment gains in Ireland can be subject to tax at 33% or 38% depending on the product. Income tax, USC and PRSI can apply to investment income. No taxes have been deducted from reinvested returns or the final balance.
You can learn more about taxes on investments below.
If you’re investing in a fund, like an ETF, the fund’s total expense ratio (TER) will reduce your actual returns below the rate that you enter. When using a traditional broker or an investing platform to invest, you may pay commissions and other trading costs too.
You can see the impact of fees on investment returns for yourself below.
The calculator applies your chosen annual return as a fixed constant across the full period. It does not account for any year-to-year variations that a real investment would produce.
The calculator applies the same monthly contribution for the full period. It does not account for increases in your investment amount over time as your income grows.
Your results are shown in nominal terms. The purchasing power of your final balance will be lower than the figure shown depending on how much the prices of goods and services rise over the period.
To see the effects of inflation on investment returns, check out our inflation calculator.
Frequently Asked Questions (FAQ)
The Rule of 72 is a quick way to determine how long it takes for your money to double. Just take 72 and divide it by your assumed annual return. For example, at a 6% rate of return you’d expect your money to double in value in 12 years i.e. 72 ÷ 6 = 12.
A fund that reinvests returns grows faster than one that pays them out, because each period’s gain is added to the balance before the next period’s return is calculated. The longer the money stays invested, the larger that difference becomes.
It depends on the rate of return. Inflation does eat into your real returns. If your investment grows at 6% per annum, but inflation is running at 3% per annum, your investment is only gaining about 3% in real purchasing power.
Yes, on money you borrow. Credit cards and certain loans apply compounding to the balance that you owe. An unpaid balance can grow in the same way as an investment, with interest payable being added to the outstanding amount before the next charge is calculated.
Yes. Moving from yearly to monthly compounding produces a noticeably higher final balance at the same return rate. Moving from monthly to daily makes little difference. The bigger driver of your final balance is the return rate you enter and how long you stay invested.
