How this interest calculator works

The calculator projects the future value of your savings using compound interest. We start with your opening balance, add any regular contributions, and apply the annual interest rate at the compounding frequency you select (for example, monthly or daily). If you enable tax or inflation, we also estimate how those factors change the final result.

The graph above shows two perspectives. The donut chart breaks the ending balance into four parts: your initial deposit, all later contributions, interest you keep after tax, and tax paid on interest. The bar chart illustrates how the balance can grow year by year when interest is compounded.

Simple interest vs. compound interest

Simple interest is calculated only on the original amount you invest. If you place $100 at 10% simple interest for two years, you earn $10 each year, for a total of $20. With compound interest, each year’s interest is added back to the balance so that future interest is earned on both the original principal and the previously earned interest. Over time, this “interest on interest” effect can make a major difference.

The effect of compounding frequency

Compounding can occur yearly, quarterly, monthly, weekly, or even daily. The more often interest is added to the balance, the faster the balance grows, assuming the same annual rate. In the short term the differences are small, but over long periods frequent compounding can noticeably increase the final amount.

The “Rule of 72” (quick mental estimate)

A popular shortcut for estimating growth is the Rule of 72. To approximate how many years it takes for money to double at a fixed interest rate, divide 72 by the rate. For example, at 8% interest, 72 ÷ 8 ≈ 9 years. This rule is not exact, but it gives a useful back-of-the-envelope estimate for moderate interest rates.

Interest rates, contributions, tax, and inflation

Fixed vs. floating rates

A fixed rate stays the same for the entire investment term. Many savings accounts, CDs, and bonds instead use a floating or variable rate that moves with a reference rate such as central bank policy rates or interbank lending rates. This calculator assumes a fixed annual rate so that projections are easy to read, but real-world products can change over time.

Regular contributions

Depositing a small amount on a regular schedule can be more powerful than making one large deposit and then doing nothing. Our calculator lets you model monthly, yearly, or weekly contributions and choose whether they are invested at the beginning or end of each period. Contributions made earlier have more time to grow, which is why starting to save sooner is so valuable.

How tax affects investment growth

Many types of interest income are taxable. When a tax rate is entered, this tool reduces each period’s interest by that rate and tracks how much is paid in tax overall. Even a modest tax percentage can noticeably lower the ending balance compared to the tax-free case, especially over long periods.

Inflation and “real” returns

Inflation slowly reduces the purchasing power of money. A dollar saved today will usually buy less in the future. When you enter an inflation rate, the calculator estimates the inflation-adjusted spending power of your final balance. This value, sometimes called the “real” balance, can be more useful for long-term planning than the raw dollar amount alone.

Putting it all together

Tax and inflation combined mean that your savings must grow faster than prices just to maintain their real value. For example, with 3 % inflation and a 25 % tax rate on interest, an investment needs a return higher than 4 % per year simply to keep pace. Use this calculator to explore different contribution plans and interest rates so you can see what it may take to reach your goals.