Compound Interest Calculator
Work out how your money grows with compound interest: enter the starting amount, the monthly contribution, the annual rate and the term, and see the future value with a year-by-year breakdown.
After tax and inflation
Deferring the tax to redemption is worth €0 in this scenario: an accumulating fund withholds nothing along the way, while a term deposit withholds the rate from every interest credit and that slice stops compounding.
Today's purchasing power applies 2% of annual inflation to the net value with tax every year. Inflation is an editable assumption (the ECB target), not a forecast.
Year-by-year breakdown
| Year | Interest | Balance |
|---|---|---|
| 1 | €79 | €2,279 |
| 2 | €224 | €3,624 |
| 3 | €437 | €5,037 |
| 4 | €722 | €6,522 |
| 5 | €1,084 | €8,084 |
| 6 | €1,525 | €9,725 |
| 7 | €2,051 | €11,451 |
| 8 | €2,665 | €13,265 |
| 9 | €3,371 | €15,171 |
| 10 | €4,175 | €17,175 |
Educational estimate, not financial advice. Returns are not guaranteed.
What compound interest is
Compound interest is interest calculated not only on the starting capital but also on the interest already earned. Each period, the interest is added to the capital and starts earning interest itself: that is why growth accelerates over time, and why the term matters as much as the rate.
How this tool calculates
The calculator compounds monthly: it converts the annual rate into an equivalent monthly rate, adds each month's contribution and accrues interest on the whole balance. The result shows the future value, the total you contributed and the interest earned, plus the year-by-year detail.
Why the term matters more than it seems
The acceleration is not linear. In the early years almost all of the balance comes from what you put in; in the later years most of it comes from interest. Doubling the term does not double the result: it multiplies it. That is why starting early, even with small amounts, usually counts for more than contributing a lot over a short period.
Tax and inflation in Italy
The headline result is gross. In Italy, interest and capital gains on financial products carry a 26% substitute tax, reduced to 12.5% for Italian and white-list government bonds. The "after tax and inflation" section lets you enter your own rate and an average annual inflation: taxing every year models a deposit account that pays interest out, taxing only on exit models an accumulating fund or ETF.
What it leaves out
The calculator knows nothing about product fees, the 0.2% annual stamp duty on financial products, or risk: the return you enter is your assumption, not a market promise, and markets do not return the same every year. Try several scenarios and compare them.
Worked example
Example: with €10,000 to start, €100 a month and 5% a year for 20 years, the future value is about €68,000. Of that, about €34,000 is your own contributions and the rest is interest generated by compounding. With the same plan over 30 years the future value rises to about €128,000 on €46,000 contributed: ten more years add more interest than the first twenty combined.
Frequently asked questions
What is the difference between simple and compound interest?
How often does this calculator compound?
Is the result after tax?
What annual return is reasonable to assume?
How does inflation affect the result?
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Sources
- Economia per tutti: compound interest and saving over time · Banca d'Italia
- Taxation of financial income: the 26% substitute tax (Decree-Law 66/2014, art. 3) · Agenzia delle Entrate
Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: