Compound interest & future value
Compound returns on monthly deposits, with inflation-adjusted value.
| Total principal paid | - |
|---|---|
| Estimated return (interest) | - |
| Maturity value (nominal) | - |
| Inflation-adjusted real value | - |
A reference calculation assuming monthly compounding and end-of-month contributions. Taxes and fees are excluded.
Setting aside a fixed amount every month feels slow in the first year and much less slow in the tenth — compounding is hard to picture without running the numbers. This calculator takes a starting balance, a monthly contribution, an expected annual return and a time horizon, and projects what the balance grows to.
It also separates the money you actually paid in from the growth on top of it, and can discount the result back into today's purchasing power if you supply an inflation rate.
How it works
How the projection works
The calculator compounds monthly and assumes each contribution lands at the end of the month. The monthly rate is the annual return divided by 12.
Two pieces are added together:
- The initial investment growing on its own:
P x (1 + i)^n - The stream of monthly contributions:
C x ((1 + i)^n - 1) / i
Here i is the monthly rate and n is the number of months (years x 12).
The four result lines
| Line | Meaning |
|---|---|
| Total principal paid | Initial investment + every contribution you made |
| Estimated return | Maturity value minus principal - the growth |
| Maturity value (nominal) | The balance at the end, in future currency |
| Inflation-adjusted real value | The same balance expressed in today's money |
The last line matters more than people expect. If you enter an inflation rate, the nominal total is divided by (1 + inflation)^years, which answers a different question: not "how big is the number" but "what will it actually buy".
Assumptions and limits
Taxes on interest or gains, account fees and any variation in the return rate are all excluded — the projection uses one constant rate for the whole period. Real markets do not deliver a steady annual figure, so this is a planning sketch rather than a forecast, and it is not investment advice. For a specific product, check the terms and tax treatment with the provider.
Terms explained
- Compounding
- Earning returns on your previous returns, not just on the original deposit. This calculator compounds monthly.
- Initial investment
- The lump sum you start with, before any monthly contributions.
- Monthly contribution
- The fixed amount added each month, assumed to arrive at the end of the month.
- Nominal value
- The future balance in future currency, ignoring inflation.
- Real value
- The same balance restated in today's purchasing power after discounting for inflation.
- Annual return rate
- The assumed yearly growth, held constant across the whole period.
Frequently asked questions
Why is the real value so much lower than the maturity value?
Because inflation erodes what money buys over time. A balance 20 years out is expressed in currency that buys less than today's, so dividing by (1 + inflation) raised to the number of years restates it in today's terms. Over long horizons even a modest inflation rate compounds into a large gap - which is exactly why the line is shown.
Does the calculator account for taxes on my returns?
No. The output is pre-tax and excludes account fees. Interest and investment gains are typically taxed, so your actual take-home will be lower than the estimated return shown. Check the tax treatment of the specific product you are considering.
What return rate should I enter?
That is your assumption, not something the calculator can supply. A useful approach is to run the projection two or three times - a cautious rate, a middling one and an optimistic one - and see how wide the range of outcomes is. If the plan only works at the optimistic rate, it is fragile.
Does it matter that contributions are assumed at month end?
Slightly. End-of-month timing means each contribution earns one month less of growth than a start-of-month assumption would give it. Over long periods the difference is small relative to the total, but it makes this a conservative estimate rather than an inflated one.
Can I use this for a fixed-rate savings account?
Yes, as an approximation, provided the account genuinely compounds monthly. Products that pay simple interest, credit interest annually, or apply a different rate to the contribution portion will diverge from this projection, so compare against the provider's own figures.
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