Compound interest calculator.

This calculator helps you to understand how much money you can accumulate by saving money into an account with interest compounded with different compounding periods.

The calculator will show you the amount that accumulates over a period of time after tax and inflation. It assumes that all money is earning interest at this rate throughout the period chosen.

Do not enter "$" signs or "," s between the thousands.

Interest rate per year
Time to compound for. If compounding period below is days, enter in Days (e.g. 10 years is 3650 days). If compounding period is months, enter in Months. If compounding period is years, enter in Years.
Compounding period (for daily compounding enter 365, for monthly enter 12, for yearly enter 1)
Tax rate (for none enter 0)
Annual inflation rate (for none enter 0)
Total you now have including compound interest in today's money (or purchasing power):

Note. The above calculations are approximate when you allow for taxation and inflation. This is due to the timings of tax payments and inflation and the way we are forced to make assumptions about these timings for these calculations. However it does show clearly the effect of taxation and inflation.

For example. Assume you invest $10,000 for 20 years, compounding monthly at 12% per year. Traditional compounding calculations show that you have the staggering sum of $108,925.

However, unless this money is in an IRA or other tax-free vehicle, with zero inflation, you REALLY end up with much less in purchasing power.

For example, with the same numbers above but with an annual tax payment of 30% and 3% inflation, you end up with just $29,252 in real purchasing power terms. In other words. Let's say that you could buy a small car today for $10,000. Save that money for 20 years and you can buy 3 small cars, not 11.

Now try just changing the interest rate to a bank CD rate of 6% per year and the same 30% taxation and 3% inflation. After 20 long years you end up with just over $12,000 in today's money terms.