Tools / Compounding
What does time do to a monthly amount?
Pick a monthly contribution, a growth rate, and a number of years. The calculator compounds it month by month and separates what you paid in from what growth added, with an optional view in today's buying power. The rate is your assumption; the arithmetic is the only claim this page makes.
Balance after 40 years
€524,963
Paid in by you
- €96,000
Growth on top
- €428,963
- after 10 years
- €34,617
- after 20 years
- €104,185
- after 30 years
- €243,994
- after 40 years
- €524,963
An illustration of arithmetic, not a promise. Growth compounds monthly at 7% a year, your stated assumption. The future is not obliged to repeat any rate.
A worked example
€200 a month at an assumed 7% a year. The contribution never changes; what changes is how much old growth is in the base, earning alongside it.
| After | Balance | Paid in | Growth |
|---|---|---|---|
| 10 years | €34,617 | €24,000 | €10,617 |
| 20 years | €104,185 | €48,000 | €56,185 |
| 30 years | €243,994 | €72,000 | €171,994 |
| 40 years | €524,963 | €96,000 | €428,963 |
An illustration of arithmetic from a stated assumption, not a promise.
How the arithmetic works
Compounding means growth on growth: your money earns a return, and then the return itself starts earning. The calculator applies the annual rate divided by twelve each month and adds your contribution at the end of the month. The default 7% is roughly the long-run average of a broad stock index, a stated assumption for an illustration. The future is not obliged to repeat it, and nobody who promises otherwise deserves your attention.
The shape of the curve matters more than any single number on it. The line is nearly flat for the first decade and steep in the last, because each doubling builds on all the doublings before it. A quick way to feel this is the rule of 72: divide 72 by the growth rate to estimate the years per doubling. At 7% that is roughly ten years, so a forty-year horizon holds about four doublings, and the last one is worth as much as the first three combined.
The today's-money view answers the question the headline number quietly skips: what will that balance actually buy? Inflation compounds too, against you, so the view divides each year's balance by the inflation rate compounded to that year. The paid-in figure stays as the euros you actually handed over, which is why real growth can even turn negative when the growth rate is low and inflation is not.
This calculator is the companion to Inflation, time, and the power of compounding, which walks through the same arithmetic with worked examples: what cash loses by standing still, why an early start outgrows a bigger late one, and how risk and return are joined at the hip.
Questions
- What is compound interest?
- Growth on growth: your money earns a return, and then the return itself starts earning. €1,000 growing at 7% earns €70 in its first year; in the second year the 7% applies to €1,070, not €1,000. Repeated over decades, that small difference is what bends the curve upward.
- Why is the default growth rate 7%?
- It is roughly the long-run average of a broad stock index, used here as a stated assumption for the arithmetic, not a forecast. You can set any rate you like; the future is not obliged to repeat any of them.
- What is the rule of 72?
- A mental shortcut for doublings: divide 72 by the yearly growth rate to estimate how many years money takes to double. At 7% a year that is roughly ten years per doubling, so a forty-year horizon holds about four doublings.
- Why show the result in today's money?
- Because inflation compounds too, against you. A balance decades from now buys less than the same number of euros buys today, so the calculator can restate each year's balance in today's buying power at an inflation rate you set (2.5% by default).
Also in tools: the credit card debt calculator, the same force with the sign flipped against you.