Inputs
$
$
Compound Interest Calculator
Total Return
$
%
Interest
%
Deposits
Compound vs Nominal
Interest and deposits
What is Compound Interest?
Compound interest is the build up of interest over time. It is the interest on interest and is the result of reinvesting any gains so that interest on the next period is earned on the principal and the existing interest.
Total Return Chart
S&P500 Historical
Historical S&P500 annual accumulated interest rates including reinvested dividends 1928-2017
No Interest
Deposits only, calculated with zero interest
Custom Interest
Table Breakdown
Year
Deposits
Interest
Total
How does this work?
The initial amount also know as the principal is increased by the annual interest rate calculated at an interval of every month. On top of this the monthly investments are also compounded at the same interval of every month. The monthly deposits are calculated at the end of each interval, this is the same as depositing the money at the end of each month.
When is interest compounded?
It is calculated at the end of each month. Currently this cannot be changed.
How do the formulas work?
The future principal value is calculated using this formula
- P' - The future value of P
- P - The exising principal
- r - The annual interest rate
- n - The compounding frequency (e.g 12 to compound monthly)
- t - The number of years
The monthly deposits value is calculated using this formula
- C' - The future value of C
- C - The monthly deposit
- i - The monthly interest rate (annual rate / 12)
- n - The number of years * the number of months
What are some realistic values?
The interest rate varies on where you are and what investments are available to you as well as how much risk you are will to take on. The estimated average annual return for the S&P 500 since it's creation in 1928 up until 2017 has been approximately 11%. The average savings account in most countries is between 0%-5%. Warren Buffet's company Berkshire Hathaway has a compounded annual return of about 20.8% since 1965.