Compound Interest Calculator
See how your savings or investments grow with compound interest and regular contributions, in New Zealand dollars. Includes a year-by-year projection.
Your Savings
Adjust to the real return after tax on your savings account, term deposit, KiwiSaver fund or other managed fund.
Growth Projection
Future Value
$83,746
after 10 years at 6% per year
💬 In Plain Words
You put in $10,000 today and then saved $400 a month. After 10 years you have $83,746 — of that, you only put in $58,000 from your own pocket. The other $25,746 is return the money generated on its own.
| Year | Contributed | Return | Balance |
|---|---|---|---|
| 1 | $14,800 | $751 | $15,551 |
| 2 | $19,600 | $1,844 | $21,444 |
| 3 | $24,400 | $3,301 | $27,701 |
| 4 | $29,200 | $5,144 | $34,344 |
| 5 | $34,000 | $7,397 | $41,397 |
| 6 | $38,800 | $10,084 | $48,884 |
| 7 | $43,600 | $13,233 | $56,833 |
| 8 | $48,400 | $16,873 | $65,273 |
| 9 | $53,200 | $21,033 | $74,233 |
| 10 | $58,000 | $25,746 | $83,746 |
Projections assume a fixed annual return. Actual returns vary and are not guaranteed. Past performance is no guarantee of future returns. This is not financial advice.
The Compound Interest Formula
👋 Simple Explanation
Compound interest is return that earns return: the gain you make starts generating its own gain, 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 = the final amount, P = the starting principal, r = the annual rate (as a decimal), n = the number of times it compounds per year, and t = time in years.
Nominal and Real Return
The return you see advertised is usually nominal. To know what you actually earn you need to subtract inflation: if an investment returns 5% a year and inflation is 2%, your real return is roughly 3%. When planning long term, use cautious assumptions and think in real terms. Remember too: compound interest works for you in saving, but against you in credit card debt, where interest also compounds.
Frequently Asked Questions
- What is compound interest?
- Compound interest is the return calculated on both your original principal and the return that has already been added from previous periods. Unlike simple interest (which applies only to the principal), compound interest grows exponentially over time.
- Should the rate I enter be before or after tax?
- For a realistic projection, use the return after tax. On a savings account or term deposit, interest is taxable and the bank deducts Resident Withholding Tax (RWT) at your rate. Income from a New Zealand managed fund is taxed at your Prescribed Investor Rate (PIR), up to 28%. If you enter the gross return the final figure will be too high.
- How do regular contributions affect the compounding effect?
- Regular contributions accelerate wealth building significantly, because each new contribution in turn starts earning a return. Contributing a fixed amount every payday, on top of an initial deposit, can multiply the final result several times over — which is exactly how KiwiSaver builds up over a working life.