€10,000 plus €250 a month at 6% compounded monthly grows to about €148,600 after 20 years, of which €70,000 is your own money and €78,600 is interest. The formula for a single lump sum is A = P × (1 + r/n)^(n×t), and each monthly deposit compounds from the month it is made.
How does compound interest work?
Compound interest means earning interest on your interest. In year one a €10,000 deposit at 6% earns €600. In year two you earn 6% on €10,600, and so on. For a single deposit the formula is A = P × (1 + r/n)n×t, where P is the principal, r the annual rate, n the number of compounding periods per year and t the years. With regular deposits, each one starts compounding from the month it is made. The calculator runs this month by month, which is why it also covers the searches for a compounding calculator or a compound growth calculator.
Does compounding frequency matter?
A little. At 6% a year, €10,000 for one year gives €10,600 compounded yearly, €10,613.64 monthly and €10,618.31 daily. The jump from yearly to monthly is bigger than from monthly to daily. Banks sometimes advertise the APY (annual percentage yield), which already includes compounding, so check whether a quoted rate is nominal or effective. An interest rate calculator compound figure of 5% nominal monthly equals an APY of 5.12%.
The rule of 72
To estimate how long it takes to double your money, divide 72 by the rate. At 6% it takes about 12 years, at 8% about 9. It is a good sanity check on any result from the tool. Start early and the effect is dramatic: €250 a month at 6% grows to about €115,500 in 20 years, but €250 a month for 30 years reaches about €251,000, more than double for 50% more time.
What the calculator does not include
- Tax. In the Netherlands savings and investments are taxed in box 3 on a deemed return, not on actual interest. Use the box 3 calculator to see the drag.
- Fees. A 1% yearly fund fee on 6% growth reduces the long-term outcome by roughly a quarter over 30 years. The Investment Calculator includes costs.
- Inflation. Use the inflation field to see the value in today’s money.
In Dutch, compound interest is called rente op rente, and the same calculation gives your eindkapitaal (final capital). The Investment Return Calculator works backwards from a start and end value to find the annual return. If you are weighing repaying a mortgage against investing, compare with the mortgage repayment calculator.
How to use this calculator
- Enter your starting amount and monthly deposit.
- Add the annual rate and the number of years.
- Choose how often the interest compounds, and optionally the inflation rate.
- Use the yearly table to see when interest starts to outweigh your deposits.
Key figures at a glance
| Formula | A = P(1 + r/n)^(nt) |
|---|---|
| Rule of 72 | Years to double ≈ 72 ÷ rate |
| Deposits | End of each month |
| Dutch tax | Box 3 deemed return, 36% |
Frequently asked questions
Multiply the principal by (1 + r/n) raised to the power of n times the number of years, where r is the annual rate and n the compounding periods per year.
APR is the nominal rate without compounding. APY includes the effect of compounding within the year, so it is slightly higher.
With monthly compounding, about €16,470. With yearly compounding, €16,289.
Not directly. Box 3 taxes your assets on a deemed return at 36%, whatever you actually earned.
Daily compounding earns slightly more, but the difference is small compared with the effect of the rate and the time.