Compound interest means interest earning interest: each period’s gains join the balance and start producing their own. Enter a starting amount and/or a regular contribution, a rate and a horizon, and see the future value split into what you put in and what compounding added — the second number is the one that grows startlingly fast with time.
Fill in the rate, years and at least one amount.
A nominal projection at a constant rate — not investment advice. Real returns vary, and tax and inflation reduce what you keep.
How it works
Each period the balance grows by the periodic rate (annual rate divided by 12, 4 or 1 depending on the compounding you choose), then your contribution is added at the period’s end — the standard ordinary-annuity convention. Rounding happens per period, the way a real account statement accrues.
Time is the dominant input. 1,000 upfront plus 100 monthly at 7% becomes 56,131.40 in 20 years — of which only 25,000 is your money and 31,131.40 is compounding. Run the same inputs at 10 years and the interest share collapses; the last years of a long horizon do the heaviest lifting.
Frequency matters less than people expect: 10,000 at 5% for 10 years gives 16,470.09 with monthly compounding versus 16,288.95 with annual — a difference of about 1%. Chasing an extra compounding period is no substitute for a better rate or an earlier start.
Practical examples
The classic long-term saver
1,000 to start, 100 every month, 7% annually, 20 years: future value 56,131.40. Contributions total 25,000; the remaining 31,131.40 — over half the final sum — is interest on interest.
No starting capital, just discipline
200 monthly at 4% for 10 years, starting from zero: 29,449.96, of which 24,000 is deposits and 5,449.96 interest. You don’t need a lump sum to start — you need years.
A lump sum left alone
5,000 at 6% with no further deposits becomes 30,112.88 in 30 years — six times the original without adding a dinar. This is why starting a decade earlier beats contributing more later.
Monthly vs annual compounding
10,000 at 5% for 10 years: 16,470.09 compounded monthly, 16,288.95 compounded annually. Real accounts differ in fees and rate far more than in compounding frequency.
Frequently asked questions
What exactly is compound interest?
Interest calculated on the balance including previously earned interest. Simple interest pays only on the original amount; compound interest lets earnings earn. Over one year the difference is trivial — over twenty it is the majority of the result.
When are contributions added — start or end of the period?
At the end of each period (the ordinary-annuity convention, matching how standing orders typically land after the month runs). Beginning-of-period contributions would give a slightly higher result — one extra period of growth per deposit.
Is the contribution per month or per period?
Per period. With monthly compounding it is a monthly deposit; switch to quarterly and the same number means one deposit per quarter — four a year, not twelve. Keep that in mind when comparing frequencies.
What rate should I enter?
The nominal annual rate of whatever you are modeling: a term-deposit rate from your bank, an expected fund return, or a scenario you want to test. For Serbian dinar term deposits, banks publish nominal annual rates — that number, before tax.
Does this account for tax on interest?
No. In Serbia, interest income is generally taxed (savings interest at 15%, with dinar-savings exemptions that change with regulations), and funds have their own rules. Model it roughly by entering an after-tax rate.
Does this account for inflation?
No — results are nominal. At 3% inflation, money doubles in purchasing-power terms only if it grows faster than that. For a real (inflation-adjusted) projection, enter the rate minus expected inflation — 7% returns at 3% inflation ≈ 4% real.
Is a guaranteed 5% deposit better than a possible 7% fund?
That is a risk question, not an arithmetic one — this calculator only shows what each rate produces if achieved. Run both and look at the gap: compounding amplifies rate differences over long horizons, which is exactly why the decision deserves care.
Why does my bank statement differ slightly from this?
Banks may credit interest on calendar dates, use day-count conventions, or apply fees and tax withholding. This tool shows clean periodic compounding — the structure of growth, not a replica of any specific account.
Do you see the amounts I enter?
No — everything runs in your browser. Your savings plans are not uploaded, logged or sent to analytics.
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