Ladabo

Compound Interest Calculator

How a balance grows when the growth itself starts earning.

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€
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years

Results update as you type. Nothing is sent anywhere.

Final balance —
Total you put in —
Growth —
Share of the balance that is growth —
Same money with simple interest — What you would have if growth never earned growth.

How this is worked out

Compounding means the growth earns growth. A balance that rises 6% in a year starts the next year larger, so the same 6% is a bigger amount. Repeat that for decades and the curve stops looking like a line.

For a single lump sum:

final = P × (1 + i)^n

For money added regularly, each deposit compounds for a different length of time, so they are summed as a series:

final = C × ((1 + i)^n − 1) ÷ i

The calculator does both and adds them together. i is the rate per compounding period and n is the number of periods.

The output worth studying is share of the balance that is growth. Early on it is small — your own contributions dominate. Somewhere in the second or third decade it crosses 50%, and from then on the account is mostly making money rather than receiving it. That crossover point is the whole argument for starting early.

A worked example

10,000 to start, 250 a month, 6% a year, 25 years:

  • Final balance: about 256,000
  • You put in: 85,000
  • Growth: about 171,000 — 67% of the total

Two thirds of that balance was never earned by you. Now change one thing: keep everything the same but run it for 35 years instead of 25. The balance reaches roughly 436,000. Ten extra years of the same 250 a month added 30,000 of contributions and about 180,000 to the outcome.

This is why compounding rewards time far more than it rewards effort. The last decade does more than the first two combined.

What this doesn't cover

  • A fixed annual return is a modelling convenience, not a forecast. Real investments do not return 6% every year — they return −20% in some years and +25% in others, and the sequence matters if you are withdrawing.
  • Fees are not deducted. A 1% annual fee sounds trivial and can remove a fifth or more of the final balance over decades. Run the calculator once at your expected return and once at that return minus the fee.
  • Tax is not applied. What you actually keep depends on where you live and what account the money sits in.
  • Inflation is not applied either, so the final figure is in future money, not today's purchasing power. Use the inflation calculator to convert it.

Common questions

Does compounding frequency make much difference?

Much less than people expect. At 6% over 25 years, moving from yearly to daily compounding changes the result by a few per cent. The rate, the amount and the number of years all matter far more.

What return should I assume?

That depends entirely on what the money is invested in, and any number is an assumption rather than a promise. A common approach is to run the calculation two or three times across a plausible range and look at the spread rather than fixating on one figure.

Why is the simple-interest figure so much lower?

Because in that version the growth never earns anything itself — it is set aside rather than reinvested. The gap between the two numbers is precisely what compounding contributed.

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