This calculator shows what an investment turns into when the interest it earns is reinvested. It focuses on the four things that move the result the most: the amount you start with, the money you add along the way, how often interest is compounded, and the drag from taxes and inflation.

What the results mean

  • Ending balance — the value of the account at the end of the term.
  • Total principal — everything you put in: the initial investment plus all contributions.
  • Total contributions — only the money added after the start.
  • Total interest — the ending balance minus the total principal.
  • Interest of the initial investment / of the contributions — the same total interest, split so you can see how much of it came from the money you started with and how much from the money you added later.
  • Buying power after inflation — the ending balance expressed in today’s money. At 3% inflation over five years, every dollar is worth a little less than 86 cents.

How compounding is applied here

The rate you enter is treated as the effective annual rate. Each compounding period uses its equivalent rate, (1 + r)^(1/n) - 1, where n is the number of compounding periods per year. That is why 5% compounded annually shows up as a monthly factor of about 0.407% in the monthly schedule: the yearly interest is spread evenly across the twelve months rather than simply divided by twelve.

More frequent compounding therefore matters only when taxes are involved — see below.

Contributions at the beginning or the end

A contribution made at the beginning of a period is invested immediately and earns interest for that whole period. A contribution made at the end earns nothing until the next period, so a contribution schedule that runs for the same number of periods ends up slightly behind. Annual contributions land in the first (or last) month of the contribution year; monthly contributions land every month. Taxes and inflation are excluded from the timing decision — they apply afterwards.

Taxes and inflation

Taxes are applied to the interest earned in each compounding period, which is how most interest income is actually taxed. Because more compounding periods mean more tax events, a higher compounding frequency slightly lowers the after-tax result — a small but real effect. Leave the tax rate at 0 to see the pre-tax picture.

Inflation is applied to the final balance, not to the annual returns. It does not change the account balance; it changes what that balance can buy.

A quick sanity check: the Rule of 72

Divide 72 by the annual rate to estimate how many years it takes to double your money. At 8%, money doubles in roughly 72 / 8 = 9 years. The rule is a rough estimate and works best for rates between about 6% and 10%, but it is a handy way to check that the long-run numbers on this page make sense.