What this tool does
Compound interest is what happens when returns start earning their own returns. This calculator projects the growth of a one-time lump sum, a recurring monthly contribution, or both at once, and shows how much of the final balance was your own money versus generated growth.
How it works
Each contribution compounds for a different length of time. A lump sum deposited on day one compounds for the entire period, while a monthly contribution compounds only for the months that remain after it is made. This is why regular investing often beats a single deposit even at a lower total outlay.
The projection applies a constant monthly rate to a growing balance, so the growth curve is not linear. In the early years most of the balance is principal; in the later years the annual gain can exceed the entire amount you originally put in. The year-by-year table makes that crossover visible.
A constant return is an assumption, not a forecast. Real returns vary year to year, and a few poor years near the start do far more damage than the same bad years near the end, because there is less time to recover.
Worked example
A 10,000 monthly contribution at 12% annual return, compounded monthly, over 15 years.
- Monthly contribution = 10,000
- Monthly rate r = 0.12 / 12 = 0.01
- Number of contributions = 180
- Each balance compounds, then the next 10,000 is added
Total invested = 1,800,000. Final balance ≈ 4,995,802, so the investment growth is ≈ 3,195,802.
Accuracy and limitations
- Returns are assumed constant and monthly. Actual markets vary, and this is not financial advice.
- Tax on gains, entry and exit loads, and inflation are not deducted. For a long horizon inflation materially erodes the real return.
Frequently asked questions
- What is the difference between a lump sum and a SIP?
- A lump sum invests everything at once, so it gains for the whole period. A SIP invests a fixed amount each month, so later contributions gain for less time. Lump sums usually win on a pure return basis because of time in the market, but a SIP reduces the risk of investing badly at the wrong moment.
- Why does compounding matter more later than earlier?
- In early periods the balance is mostly your own contributions, so gains are small in absolute terms. Once the balance is large, the same percentage rate produces a much bigger annual gain. Growth becomes self-reinforcing, which is why the curve in the table bends sharply upward near the end.
- What return should I assume?
- Use something conservative and consistent. Assuming a very high rate makes the projection look impressive but tells you nothing useful, and it hides the effect of a bad year. If you want a sense of range, run the same contribution at a low, a mid, and a high rate and compare the outcomes.
- Is my investment data uploaded?
- No. The whole projection is computed locally in your browser and nothing is sent or stored.