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Compound Interest Calculator

Discover the power of time and how your investments can grow exponentially.

Parameters last reviewed on 06/09/2026 · Sources: Agencia Tributaria — renta del ahorro

Compound interest is one of the fundamental principles of personal finance: the interest your investment generates is reinvested and in turn generates new interest. Over the long term, this cumulative effect can exponentially multiply the initial capital: the earlier you start and the longer you stay invested, the greater the impact.

This calculator lets you project the growth of your savings or investments over time, including periodic contributions. You can select different reference funds or indices (S&P 500, MSCI World, Nasdaq 100...) or manually enter an estimated interest rate. The chart shows the month-by-month evolution of total capital, distinguishing between what has been contributed and what has been generated by interest.

Investment Details

Enter the data and press Calculate to see the projection.

Indicative projection based on historical rates. Markets may behave very differently in the future. All investments carry risk of loss.

How compound interest is calculated

The basic formula is C = C₀ · (1 + i)^n, where C₀ is the initial capital, i the annual interest rate expressed as a decimal and n the number of years. The exponent is what matters most: each year multiplies the accumulated capital, not just the initial amount, which is why growth accelerates over time. When you also make regular contributions, the future value of that series is added to the previous result, calculated with the expression A · [((1 + i)^n − 1) / i]. The calculator combines both terms to give you the final capital, the total contributed and the interest generated, separately.

Worked example

Take €10,000 invested at 7% a year for 20 years, with no further contributions. We apply C = 10,000 × (1 + 0.07)^20 = 10,000 × 3.8697 = €38,697. You contributed €10,000 and generated €28,697 in interest, almost triple your initial investment. If you also contributed €200 a month (€2,400 a year), the future value of those contributions would be about €98,400, bringing the final capital above €137,000 having put in €58,000 of your own money.

Growth of €10,000 at 7% a year

YearsAccumulated capitalInterest generated
514.026 €4.026 €
1019.672 €9.672 €
1527.590 €17.590 €
2038.697 €28.697 €
2554.274 €44.274 €
3076.123 €66.123 €

How to interpret the result

Focus above all on the ratio between what you contributed and the interest generated, because that is the metric that reveals the power of compounding. Over short periods most of the final capital comes from your contributions; from around fifteen or twenty years onwards the interest starts to exceed them and growth becomes far steeper. Bear in mind two limitations as well: the calculator assumes a constant return, whereas real markets fluctuate and can string together negative years, and it discounts neither inflation nor the taxation of savings, which in Spain taxes capital gains at between 19% and 30% when you cash in the investment.

What starting ten years late really costs

Compound interest rewards time more than amount, and that is clearer with two people than with a formula. Ana pays in €200 a month from age 25 to 35 and then never contributes again: €24,000 in total. Bruno starts at 35 and pays the same €200 a month until 65: €72,000, three times as much. At an average annual return of 6%, by 65 Ana would have around €200,000 and Bruno about €195,000. Ana reaches the same figure having contributed a third as much, simply because her money had thirty more years to multiply. The practical message is not that contributing more is useless, but that each year of delay is a year you cannot recover by contributing later: the first euros are the ones that work hardest.

Nominal return, inflation and real return

Capital growing at 6% a year while prices rise at 3% does not make you 6% richer, but roughly 3%. That difference, the real return, is the only one that matters when the goal is preserving purchasing power, and it explains why money sitting in a current account loses value silently: at 3% inflation, €10,000 kept under the mattress retains the buying power of about €7,400 after ten years. Compound interest works in both directions. That is why it pays to look at three figures together: expected return, expected inflation and fees, because all three compound year after year. An annual fee of 1.5% versus 0.3% may look like a detail, and over thirty years it takes a very considerable share of the final capital.

About Compound Interest

Compound interest is calculated on the initial capital plus all the interest accumulated up to that point, rather than only on the starting amount. In other words, interest itself generates further interest, producing exponential, snowball-like growth. This is the fundamental difference from simple interest, where the return is always computed on the initial sum and growth is linear. Over short periods the difference between the two is small, but over twenty or thirty years it becomes enormous.

Because time is the most decisive variable in compound interest, even more than the amount you contribute. Growth is exponential rather than linear, so the final years of a long investment add far more capital than the early ones. Starting ten years earlier with modest contributions usually produces a larger final sum than starting late with much bigger ones, simply because the money has had more cycles to be reinvested. That is why regular contributions started early are so effective.

Each fund or index (S&P 500, MSCI World, Nasdaq 100...) has a percentage reflecting its historical long-term average annual return, without discounting inflation. These are indicative figures to show how your investment would grow with similar past performance. When you select a fund, that percentage is automatically applied as the estimated interest, but you can adjust it manually at any time. Remember: past performance does not guarantee future results and all investments carry risk of loss.

The calculator shows capital in nominal euros, that is, without discounting the loss of purchasing power. With average inflation of 2% a year, €100,000 in 25 years would buy roughly what €61,000 buys today. To think in real terms it helps to use the real return, obtained by subtracting inflation from the nominal return: if you expect a 7% return and 2% inflation, your real return is around 5%. Entering that 5% into the calculator gives you the final capital expressed in today's purchasing power, which is usually the more useful figure for planning.

With simple interest the return is always calculated on the initial capital, so growth is linear: €10,000 at 7% generates €700 every year, unchanged. With compound interest the returns are reinvested and start generating returns themselves, so the annual gain increases over time. In the example above, the second year would generate €749 instead of €700, the third €801, and so on. Over ten years simple interest would give €17,000 and compound interest €19,672; over thirty years the gap widens to €31,000 versus €76,123.

It depends on the financial product. A bank deposit may compound annually, quarterly or monthly; an investment fund accrues returns continuously through its net asset value. The higher the compounding frequency, the higher the final capital, though the difference is modest: €10,000 at 7% over 20 years gives €38,697 with annual compounding and about €40,387 with monthly compounding. This calculator uses annual compounding, the most common convention and the one most simulators use to compare products.

The more often the better for the investor, although the difference is smaller than people imagine. At a 6% nominal rate, compounding once a year gives exactly 6% effective; monthly raises it to about 6.17%, and daily to just over 6.18%. Beyond a certain frequency the effect plateaus, because mathematically it tends to a limit. Where frequency does matter a lot is in the opposite direction: on credit card debt compounded monthly, the same mechanism works against you and explains why a 20% nominal rate becomes a noticeably heavier burden over the year. When comparing products, always look at the APR, which already incorporates the effect of compounding frequency and lets you compare like with like.

Far more than the percentage suggests. Picture €10,000 invested for thirty years with a gross annual return of 7%. With total fees of 0.3%, the final capital is around €70,000. With fees of 1.8%, it lands near €45,000. That gap of one and a half points, small on paper, takes roughly a third of the result, because it is charged every year on the accumulated capital and that money stops compounding. This is why the figure to look at is not only past performance but the product's total cost, including ongoing charges, custody fees and any subscription or redemption charge. It is the only thing about an investment you can know in advance with certainty.

Related guide

Compound interest and percentages: the maths of savingWhy time matters more than amount, how everyday percentages are calculated, and what inflation and fees quietly take away.

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