Compound Interest Calculator
See how your savings or investments grow with compound interest and monthly contributions, in Australian Dollars (AUD). Includes a year-by-year projection.
Your Investment
Adjust based on the instrument: a term deposit usually offers a fixed rate known in advance; a diversified share fund may return more, with more variability.
Growth Projection
Future Value
$965,907
after 10 years at 7% annual return
💬 In Simple Words
You put in $50,000 today and added $5,000 every month after that. After 10 years you'll have $965,907 — of that, you only contributed $650,000 out of pocket. The other $315,907 is the return that money generated on its own.
| Year | Contributed | Return | Balance |
|---|---|---|---|
| 1 | $110,000 | $5,577 | $115,577 |
| 2 | $170,000 | $15,895 | $185,895 |
| 3 | $230,000 | $31,297 | $261,297 |
| 4 | $290,000 | $52,149 | $342,149 |
| 5 | $350,000 | $78,846 | $428,846 |
| 6 | $410,000 | $111,810 | $521,810 |
| 7 | $470,000 | $151,495 | $621,495 |
| 8 | $530,000 | $198,385 | $728,385 |
| 9 | $590,000 | $253,003 | $843,003 |
| 10 | $650,000 | $315,907 | $965,907 |
Projections are estimates based on a fixed return rate. Actual returns vary depending on the instrument and market conditions. This does not constitute financial advice.
The Compound Interest Formula
👋 Simple Explanation
Compound interest is interest that earns interest: the return you generate starts generating its own return, and the total grows faster and faster over time.
Compound interest is calculated with this formula:
A = P × (1 + r/n)^(n×t)
Where A = final amount, P = initial principal, r = annual interest rate (decimal), n = number of times it compounds per year, and t = time in years.
The Power of Starting Early
Time is the most important variable in compound interest. Someone who starts saving or investing years earlier accumulates significantly more than someone who starts later with the same contributions — even if they invested for less total time.
That's why financial advisors recommend starting to save or invest as early as possible, even with small amounts, rather than waiting until you have more money available. See the article on superannuation vs. investing outside super for a common tax-effective way to build wealth in Australia.
Frequently Asked Questions
- What is compound interest?
- Compound interest is interest calculated on both your initial principal and the interest that has already accumulated from previous periods. Unlike simple interest (which only applies to the principal), compound interest grows exponentially over time.
- Can I use this calculator to project a term deposit?
- You can use it as a rough approximation by entering the term deposit's interest rate and leaving monthly contributions at zero, since a standard term deposit usually doesn't allow additional deposits during its term. Outside superannuation, investment earnings and franked dividends are also subject to Australian income tax, unlike super in the pension phase.
- How do monthly contributions affect compound interest?
- Regular contributions significantly accelerate capital accumulation thanks to the compounding effect. Adding a fixed amount every month, on top of an initial deposit, can multiply your final result several times over compared to not contributing anything further.