Compound interest calculator
What decades do to a modest sum, with the part added by compounding shown separately and the total restated in today's money.
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That is the balance after — years. Of it, — is interest you never paid in.
- Paid in yourself
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- Earned as interest
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- In today's money
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The line is the balance. The filled area is the part you paid in yourself. Everything between them was added by compounding. Years run along the bottom.
You reach the target in year —.
The target is out of reach over this period. Add years, add more each month, or revise the target itself — of the three levers, years is usually the strongest.
The third card is the same sum in today's money, with prices rising 3% a year. Over this period prices rise —-fold, and by the same factor the headline figure looks larger than what it will buy.
Inflation is set to zero, so today's money matches the headline figure. Put in 2–3% a year to see how much of the total rising prices take.
One amount is needed. Compounding works either from a starting sum or from regular contributions. Enter one of them — or both, which is fastest.
How this is calculated
Each year the balance is multiplied by the rate, and the year's contributions are added on top:
balance = balance × (1 + rate) + contributions for the year
Compounding once a year is the conservative model. With monthly compounding a long horizon would end about a quarter higher. We picked the model that promises less and matches the way market returns are usually quoted.
Why the first years look empty
The gain is a percentage of the balance, so early on it is small: $25,000 at 10% adds $2,500 in the first year — the same figures as the piece on the million. Twenty years later the same percentage adds $15,290 a year; after forty, more than $100,000. The rate never changed. Only the sum it is applied to did.
That leaves one lever that really matters: time. Contributions speed up the beginning and the rate speeds up everything, but years work for you without your involvement.
What the calculator leaves out
Taxes, broker fees and market drawdowns. Real returns do not arrive as a smooth ten per cent: some years lose money, and the order of good and bad years changes the outcome noticeably if you are withdrawing during that time.
Inflation is shown on its own line rather than folded into the calculation, so both numbers stay visible: what the balance will be and what it will be worth. The rate is yours to set — 3% a year is the usual reference for the dollar, but for the tenge, the som or the manat it is different, and your own figure is more honest than someone else's default.