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Year by year
| Year | Contributed | Interest | Total |
|---|---|---|---|
| 1 | €13,600 | €841 | €14,441 |
| 2 | €17,200 | €2,002 | €19,202 |
| 3 | €20,800 | €3,508 | €24,308 |
| 4 | €24,400 | €5,383 | €29,783 |
| 5 | €28,000 | €7,654 | €35,654 |
| 6 | €31,600 | €10,349 | €41,949 |
| 7 | €35,200 | €13,500 | €48,700 |
| 8 | €38,800 | €17,138 | €55,938 |
| 9 | €42,400 | €21,299 | €63,699 |
| 10 | €46,000 | €26,022 | €72,022 |
| 11 | €49,600 | €31,346 | €80,946 |
| 12 | €53,200 | €37,316 | €90,516 |
| 13 | €56,800 | €43,977 | €100,777 |
| 14 | €60,400 | €51,380 | €111,780 |
| 15 | €64,000 | €59,578 | €123,578 |
| 16 | €67,600 | €68,629 | €136,229 |
| 17 | €71,200 | €78,595 | €149,795 |
| 18 | €74,800 | €89,542 | €164,342 |
| 19 | €78,400 | €101,540 | €179,940 |
| 20 | €82,000 | €114,665 | €196,665 |
At a 7% annual return — close to the long-run global equity average — a €300 monthly contribution turns into far more interest than capital once the horizon passes ~20 years. Time does most of the work.
What is compound interest?
Compound interest means your gains are reinvested, so each period you earn returns on your original capital plus all previously accumulated returns. Unlike simple interest — which only ever pays on the original amount — compounding grows the base itself, producing an accelerating, exponential curve over time.
The formula
A = P · (1 + r/n)^(n·t)
A = final amount · P = principal · r = annual rate · n = compounding periods per year · t = years. Adding a periodic contribution stacks a second growing series on top.
Why time matters more than the rate
The exponential shape means the final years contribute the largest gains, because the base is largest by then. Starting earlier — even with smaller amounts — usually beats starting later with larger amounts. A modest contribution compounded for 30 years routinely outgrows a much bigger one compounded for 10.
Simple vs compound interest
Simple interest pays a fixed amount each period on the original capital only — growth is linear. Compound interest pays on the growing balance — growth is exponential. Over short horizons the difference is small; over decades it is enormous.
Frequently asked questions
What is compound interest in simple terms?
It is interest earned on both your original capital and the interest already accumulated. Your money's growth feeds further growth, which is why long horizons matter so much.
How is compound interest calculated?
With the formula A = P·(1 + r/n)^(n·t), where P is the principal, r the annual rate, n the compounding periods per year and t the number of years. This calculator also adds a fixed monthly contribution, compounded monthly.
What annual return should I assume?
Returns are uncertain and never guaranteed. As an illustrative reference, the long-run global equity average has been roughly 6–8% nominal before fees and inflation. Use a conservative figure and treat the result as a scenario, not a forecast.
Does the contribution frequency change the result?
Yes, slightly. More frequent contributions and more frequent compounding both increase the final amount, but the dominant levers are the time horizon and the contribution size.
What is the difference between compound interest and compound returns?
They describe the same mechanism. 'Interest' is the classic term for fixed-income style growth; 'returns' generalizes it to assets like equity ETFs where the periodic gain varies but is still reinvested.
See how the model reads the market
Compounding rewards staying invested with discipline. See how the model interprets the current regime across a basket of UCITS ETFs.
This calculator is educational and illustrative. The result is a mathematical projection, not a forecast or investment advice. Returns are uncertain, fees and taxes are not included, and investing carries risk of capital loss. Past results do not guarantee future returns.
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