Compound Interest Calculator
Estimates assume contributions at the end of each month, a constant annual return, and no taxes or inflation. See the guide below for limitations.
How Compound Interest Works
Compound interest is interest earned on top of interest. When you invest, your returns are reinvested, and those returns then earn their own returns. Over long periods, this effect turns steady contributions into significantly larger sums.
Simple vs compound interest
| Simple interest | Compound interest | |
|---|---|---|
| Interest calculated on | Original principal only | Principal + accumulated interest |
| Growth pattern | Linear | Exponential |
| Real-world use | Some loans, short-term products | Investments, savings, most long-term products |
With simple interest, a Rp 10,000,000 deposit at 7% earns Rp 700,000 every year — forever. With compounding, the second year's interest is calculated on Rp 10,700,000, the third on Rp 11,449,000, and so on. The difference grows with every period.
How the calculator works
The tool above projects the future value of an initial investment plus regular monthly contributions. It converts the nominal annual rate into an effective monthly rate based on the compounding frequency you choose, then compounds monthly — which matches how most investment products and index funds actually accrue.
Assumptions built in: - Contributions are made at the end of each month. - The annual return stays constant for the whole period (no tax, fees, or inflation). - Returns are reinvested automatically.
The "gains" figure is simply final value minus everything you put in. In the chart, the gap between the blue balance line and the gray contribution line is exactly what compounding adds.
Nominal vs effective rate
Banks and products often advertise a nominal (stated) annual rate, but what matters for your wallet is the effective rate — what compounding actually does to it. Compounding more frequently (monthly vs annually) increases the effective rate. The calculator handles this conversion for you; the difference matters most at higher rates and longer periods.
A worked example
A 25-year-old invests Rp 1,000,000 once and adds Rp 500,000 every month, with an average annual return of 7% compounded monthly. After 20 years:
- Total contributions: Rp 121,000,000
- Final value: roughly Rp 270,000,000
- Gains: roughly Rp 149,000,000 — more than the money put in
The same contributions with no compounding (a plain savings pile) would be worth exactly what was put in: Rp 121,000,000. That difference is the entire point of investing early and staying invested.
Limitations to keep in mind
- Returns are never guaranteed or constant — markets fluctuate, and past performance does not predict future results. The calculator is a planning tool, not a prediction.
- Inflation reduces real purchasing power; a nominal 7% return is not 7% in real terms.
- Taxes and fees can meaningfully reduce what you keep — see the expense ratio explainer for how ongoing fees eat into compounding, and the DCA calculator for how regular investing interacts with market timing.
Related reading
- Index funds vs mutual funds — where most people put money they plan to compound
- Expense ratio calculator — the fee that silently reduces compounding
- Dollar-cost averaging calculator — steady monthly contributions, explained
This article is for general educational purposes only and is not personalized financial advice. Consider consulting a licensed financial advisor for guidance specific to your situation.