Compound Interest Calculator

Where the money actually comes from

Over a long enough period, most of a portfolio's final value is growth rather than contributions. That is the whole argument for starting early, and the calculator shows the split explicitly so you can see when it flips.

What surprises people is how late that happens. For the first decade the balance is dominated by what you paid in, and the compounding looks disappointing. The acceleration is real but it arrives at the end, which is precisely why so many people stop before it does.

Assumptions that are usually hidden

Contributions are added at the end of each period rather than the start, which is the standard convention and produces a slightly lower result than assuming the money is invested a month earlier. Growth compounds monthly.

The return is constant, which never happens in reality. That is the single largest difference between this arithmetic and an actual outcome, and it is why the result should be treated as a calculation rather than a projection.

Why a constant return flatters the picture

Real returns arrive unevenly, and unevenness matters enormously once you start withdrawing. While you are contributing it matters much less, so a constant-return model is a reasonable approximation during the accumulation phase and a poor one afterwards.

If you are planning around drawing an income from this balance, the sequence of returns tool is the more honest companion, because it shows what a constant-return assumption is quietly hiding.

Common questions

What return should I assume?

There is no correct answer. Many people use 5% to 7% for a diversified equity portfolio before inflation. Whatever you pick, run the calculation two percentage points either side to see how sensitive the outcome is, because that sensitivity is the real lesson.

Does it matter whether contributions are at the start or end of the month?

Slightly. Contributing at the start gives each payment one extra month of growth, which compounds into a modest difference over decades. This calculator uses end-of-period, the more conservative and more standard convention.

Is this the same as compound annual growth rate?

No. CAGR describes the constant rate that would have produced an outcome you already know. This runs the calculation forwards from a rate you assume.

Why does the growth look so slow at first?

Because compounding works on the balance, and early on the balance is mostly your own contributions. The effect is exponential, which means almost all of it is concentrated in the final years of any long period.