| Year | Balance | Deposited | Interest earned |
|---|
The power of compound interest
Albert Einstein reportedly called compound interest the eighth wonder of the world. With compound interest, you earn interest not just on your initial deposit but on all the interest you have already earned — creating an exponential growth curve over time.
A = P(1 + r/n)^(nt)
A = final amount, P = principal, r = annual rate,
n = compounds per year, t = years
How to use this calculator for a realistic savings plan
Start with the amount you already have saved, then enter a contribution you could make in ordinary months—not an idealized number. The most useful projection is one you can sustain through rent increases, holidays, repairs, and other real-life costs.
Test a range of return rates instead of relying on a single optimistic estimate. Savings accounts, bonds, and market investments behave differently, and investment returns are never guaranteed. A lower-rate scenario shows whether your goal still works if results are less favorable than hoped.
Compare the impact of time and contributions. An extra year of saving and a modest recurring deposit can matter more than trying to chase a higher return. This calculator is for education and planning; it does not account for taxes, fees, inflation, or changes in contributions.
For a worked example, read How Compound Interest Works.