Year-by-year growth schedule
Here is how your balance compounds over time, showing total contributions compared to accumulated interest:
| Year | Total Invested | Interest Earned | Ending Balance |
|---|---|---|---|
| Enter your details above to see the breakdown. | |||
How compound interest works
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. With regular monthly contributions and reinvested gains, the proportion of your portfolio generated by interest expands dramatically over longer time horizons.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest only pays return on the original sum invested. Compound interest pays interest on your initial deposit plus all previously accumulated interest, leading to exponential growth over time.
What is a realistic annual rate of return?
Historically, broad stock index funds (such as the S&P 500 or FTSE All-World) have delivered approximately 7% to 10% average annual returns before inflation over multi-decade periods, while conservative cash savings accounts and government bonds often yield 3% to 5%.
How does compounding frequency impact the outcome?
More frequent compounding (such as monthly vs annually) allows interest to be reinvested sooner, slightly boosting the total return. For most consumer savings accounts and index funds, monthly compounding is standard.