PureTools
Compound Interest Calculator
Project investment growth with inflation-adjusted value, tax drag, and a goal-solver mode. 7 currencies, daily to annual compounding, full yearly breakdown.
Advanced: inflation & tax
| Year | Start balance | Contributions | Interest | Tax paid | End balance |
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How to use the Compound Interest Calculator
- Pick a mode, "Project growth" to see how an investment grows, or "Reach a goal" to compute the monthly contribution needed for a target balance.
- Pick your currency, USD is selected by default on the English site, with EUR, GBP, CAD, AUD, JPY and CHF available.
- Enter your initial investment, recurring monthly contribution, expected annual return, time horizon, and compounding frequency.
- Open Advanced: inflation & tax to refine the projection. Set your expected inflation rate (default 3%) and your tax rate on returns. Pick "Taxable yearly" for a regular brokerage account or "Tax-deferred" for a retirement account (401k, PEA, etc.).
- The summary shows your nominal final balance (what the screen will say in 30 years) AND the real value in today's money, a far more useful figure for planning.
- Toggle Show yearly breakdown for a year-by-year table of starting balance, contributions, interest, tax paid and ending balance.
- Click Copy summary to grab a clean text recap with all key numbers.
Why nominal vs real (inflation-adjusted) matters
A $1,000,000 final balance sounds great. But if it takes 30 years to get there at 3% inflation, that money has the purchasing power of about $412,000 in today's dollars. The real return is what you can actually spend; it's the number that matters for retirement planning. The tool always shows both so you make decisions with eyes open. To plan your full retirement nest egg and withdrawal phase, see the Retirement Calculator.
Tax timing: brokerage vs retirement account
On a regular brokerage account, capital gains and dividends are taxed each year, that money never gets to compound. In a tax-deferred account (US 401k/IRA, French PEA, UK ISA pension), all earnings compound untaxed; tax is paid only on withdrawal. Over 30 years, the difference between paying 25% tax annually vs 25% only on withdrawal can be 30-40% of the final balance. The tool models both.
Compounding formula reference
- Lump sum: A = P × (1 + r/n)n×t
- With monthly contributions: A = P × (1 + r/n)n×t + PMT × ((1 + r/n)n×t − 1) / (r/n) × (n / 12)
- Doubling time: t = ln(2) / (n × ln(1 + r / n))
- Real return (Fisher): rreal = (1 + rnominal) / (1 + i) − 1
- Required PMT to reach goal: PMT = (Goal − P × (1 + r/n)nt) × (r/n) / ((1 + r/n)nt − 1) × (12/n)
This is a projection, not a guarantee
Real markets are volatile. The S&P 500 has averaged around 10% annual return historically, but with years of −38% (2008) and +29% (2019). The calculator assumes a constant rate, no fees, no behavioural mistakes, and ignores currency risk for international assets. Use it to compare scenarios and understand orders of magnitude, not as financial advice. PureTools is not a financial advisor.
Frequently asked questions
What is compound interest?
Compound interest is the interest calculated on the initial principal plus any accumulated interest from previous periods. Unlike simple interest, which earns only on the principal, compound interest grows exponentially because each period's interest itself starts earning interest. For example, $10,000 at 7% annual return becomes about $19,672 after 10 years (simple: $17,000) and $76,123 after 30 years through the compounding effect.
Why does the inflation-adjusted value matter?
Nominal returns can be misleading. If your $100,000 investment grows to $500,000 in 30 years but inflation averaged 3%, the real purchasing power is only about $206,000 in today's money. The tool shows both numbers so you can plan around the value you will actually be able to spend, not the headline figure. The default 3% rate matches the long-term average for developed economies; you can override it.
What is the difference between taxable and tax-deferred?
Taxable accounts (regular brokerage) pay tax on the interest each year, which reduces compounding. Tax-deferred accounts (US 401k, IRA, French PEA, UK ISA, etc.) let interest compound untaxed and tax is paid only on withdrawal, usually leading to a substantially higher final balance. Tax-free accounts (Roth IRA, French Livret A) avoid tax entirely. The tool models the first two; tax-free is the same as setting tax rate to 0.
How does Goal mode work?
In Goal mode you enter a target final balance (for example $1,000,000), your initial investment, expected return rate, and time horizon. The tool computes the monthly contribution required to reach that target. If your initial investment plus the chosen rate already overshoots the goal, the required contribution can be zero or negative. If the goal is mathematically unreachable in the time given, an explanation is shown.
What is the Rule of 72?
The Rule of 72 is a quick mental approximation: divide 72 by your annual return rate to estimate how many years it takes for money to double. At 6%, money doubles in roughly 12 years. At 9%, in 8 years. The tool shows the exact value alongside this rule of thumb and uses the selected compounding frequency for the exact calculation.
Are my numbers saved or sent anywhere?
All calculations happen entirely in your browser. Nothing is transmitted to any server. Your inputs are saved only to your local browser storage so the tool remembers your scenario on the next visit; you can reset them at any time using the Reset button. The page works offline once loaded. Your data is never used to train AI models or improve machine learning systems.
How does the compounding frequency affect the final balance?
More frequent compounding produces a slightly higher return for the same nominal rate. At 6% annual rate, monthly compounding yields an effective annual rate of about 6.17%, while daily compounding reaches 6.18%. The difference looks small over one year but compounds into a meaningful gap over decades: $100,000 invested for 30 years at 6% grows to roughly $602,000 with annual compounding and $620,000 with daily compounding. Most savings accounts and bonds use monthly or daily compounding. Index funds and stocks reinvest dividends at irregular intervals, which the calculator approximates by letting you choose the frequency that matches your actual investment vehicle. When comparing savings products, always look for the APY (annual percentage yield), which already accounts for the compounding frequency built into that product.