Compound Interest Calculator
See how your wealth grows through the power of compound returns over time.
Why starting early makes all the difference
Compound interest is often called the eighth wonder of the world, and for good reason. Unlike simple interest, which only earns returns on your original investment, compound interest earns returns on your returns. Over time, this creates an exponential growth curve that dramatically accelerates your wealth accumulation. The longer your money compounds, the more powerful the effect becomes.
Consider this example: if you invest 200 euros per month starting at age 25 with a 7% annual return, you would have approximately 264,000 euros by age 55. If you waited until 35 to start the same investment, you would have only about 122,000 euros by 55. The ten-year head start more than doubles your final amount, even though you only contributed an additional 24,000 euros in total deposits. That extra 118,000 euros is entirely generated by compound interest.
The key variables that determine your compound growth are: the initial amount, regular contributions, the rate of return, and time. Of these, time is the most powerful factor and the only one you cannot buy back. This is why financial advisors universally recommend starting to invest as early as possible, even with small amounts. A 25-year-old investing 100 euros per month will likely end up wealthier than a 40-year-old investing 300 euros per month, assuming the same returns.
Expected returns vary significantly by asset class. Savings accounts currently offer 2-4%, government bonds around 3-4%, and diversified stock portfolios have historically returned 7-10% annually over long periods. Higher returns come with higher volatility, meaning your portfolio value will fluctuate more in the short term. For long investment horizons of 15 years or more, however, diversified stock investments have historically always produced positive returns.
Remember that the calculator shows nominal returns. Inflation erodes purchasing power over time, so a 7% nominal return with 2% inflation gives you a real return of roughly 5%. Even so, investing remains one of the most effective ways to grow your wealth over the long term and stay ahead of inflation.