Compound Interest Simulator
Visualise how your money grows over time. Enter your initial capital, monthly contribution and expected return to see the power of compound interest in action.
Compound Interest Simulator
Illustrative simulation. Past returns do not guarantee future results.
How does compound interest work?
Compound interest is the process whereby returns generated by an investment are reinvested and generate their own returns. In other words: you earn interest on your interest. This exponential effect is what turns small, consistent contributions into significant wealth when maintained over decades.
The formula is simple: Final value = Capital x (1 + r)^n, where r is the return per period and n the number of periods. But its long-term effect is profoundly counterintuitive: most of the growth happens in the final years.
Example: Investing 200 per month at 7% annual return for 30 years means you will have contributed 72,000 from your own pocket but accumulated over 227,000. The 155,000 difference is pure compound interest working for you.
Note: This simulator uses a constant nominal return for illustrative purposes. Real markets fluctuate year to year. A 7% annual return is the approximate historical average for global equities over the long term, but is not guaranteed.
Learn more about this concept in the Personal Investing course, especially the chapter Compound interest: the eighth wonder.