Calculate compound interest with monthly contributions and see exactly how your savings and investments grow year by year.
Starting balance
€
Recurring monthly deposit
€
Investment horizon
20 years
13060
Expected annual return
5.0%
0%15%30%
Compounding frequencyHow often interest is applied
What is Compound Interest?
The Basic Idea
Compound interest is calculated not only on your initial principal, but also on all the interest already earned in previous periods. In other words, your money earns interest — and then that interest earns interest too. This compound interest formula with monthly contributions creates a snowball effect that, over time, can dramatically grow your savings and investments.
The Formula
The standard compound interest formula is:
A = P × (1 + r/n) ^ (n × t)
Where:
A = final amount
P = principal (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest compounds per year
t = number of years
A Real Example
Imagine you invest €5,000 at an annual interest rate of 7%, compounded monthly, for 20 years. Without any additional contributions, your investment would grow to approximately €20,976 — more than four times your original amount. That is the power of compound interest working silently over time.
Why Start Early?
The earlier you start investing, the more time compound interest has to work. An investor who starts at age 25 and contributes €200 per month at a 7% annual interest rate will have significantly more at retirement than someone who starts at 35 — even with the same monthly contributions. Time is the most powerful variable in any compound interest calculation.
From the Blog
Guides and insights to help you understand compound interest and build better saving habits.
Whether you're planning for retirement, building an emergency fund, or growing a long-term investment, understanding how compound interest works is the foundation of every smart financial decision.
Compound interest means your balance grows from both the money you invest and the returns already earned in previous periods. Unlike simple interest, the interest itself earns interest over time.
The formula is A = P x (1 + r/n)^(n x t), where P is the principal amount, r is the annual interest rate as a decimal, n is the number of times interest compounds per year, and t is the number of years.
Regular monthly deposits steadily increase the base amount that compounds over time. Consistent contributions are often as important as the initial lump sum for long-term growth.
The compounding frequency determines how often interest is added to your balance. Daily compounding produces slightly higher returns than monthly, which produces slightly higher returns than yearly, because interest is reinvested more frequently.
At a 7% annual interest rate compounded monthly, $10,000 grows to approximately $20,097 in 10 years and $76,123 in 30 years — without any additional contributions. Add a monthly contribution of $200 and the 30-year balance climbs to over $227,000. The exact result depends on your rate, frequency, and how much you add each month.
Compound interest is one of the most powerful forces in personal finance — for both savings accounts and long-term investments. In a savings account, it gradually grows your balance without any effort. In an investment portfolio, it multiplies returns over decades. The longer your time horizon, the more dramatic the effect.
The Rule of 72 is a shortcut to estimate how long it takes to double your money. Divide 72 by your annual interest rate and you get the approximate number of years. At 6% annual return, your money doubles in about 12 years (72 ÷ 6 = 12). At 9%, it doubles in roughly 8 years. It's a quick way to understand the power of compound interest without doing complex math.
With simple interest, you earn returns only on your original principal. With compound interest, you earn returns on both the principal and the accumulated interest. Over long periods, the difference is enormous. A $10,000 investment at 7% simple interest earns $700 per year, every year. With compound interest, that same investment earns more each year because the base keeps growing.
