RoyalCalculator
Estimate how a lump sum and ongoing contributions grow under compound interest, with optional adjustments for taxes on interest income and inflation's effect on purchasing power. Change any value and click Calculate.
| Initial Investment | |
| Annual Contribution | |
| Monthly Contribution | |
| Contribute at the | of each compounding period |
| Interest Rate | % |
| Compound | |
| Investment Length |
years
months
|
| Tax Rate ? | % |
| Inflation Rate | % |
| Ending Balance | - |
| Total Principal | - |
| Total Contributions | - |
| Total Interest | - |
| Interest on the Initial Investment | - |
| Interest on the Contributions | - |
| Buying Power After Inflation | - |
| Buying power shows what the ending balance would be worth today, in today's dollars, after inflation erodes its purchasing power. | |
| Year | Deposit | Interest | Ending Balance |
|---|
Interest is simply the price of borrowed money — what a borrower pays a lender for the use of funds over time, usually expressed as a percentage of the amount borrowed. It's the mechanism underneath nearly every loan, bond, and savings account that exists.
Say you borrow $100 for a year at a 10% rate. Simple interest charges that 10% once, against the original $100, every period — it never compounds on itself:
Borrow that same $100 for two years at simple interest and you'd owe $120 at the end: $100 principal plus $10 for each of the two years. Nothing earns interest on top of interest.
Compound interest is different — and it's what almost everyone actually means when they say "interest" in everyday conversation. Each period, interest is calculated on the running total (principal plus whatever interest has already accrued), not just the original amount.
Using the same $100 example: year one earns $10, bringing the balance to $110. In year two, the 10% applies to that full $110 — not the original $100 — earning $11 instead of $10. After two years you're at $121, a dollar more than simple interest would produce. That extra dollar is interest earning interest, and it's the entire reason compounding gets more powerful the longer money sits and the more frequently it compounds (daily beats monthly, which beats annually, with continuous compounding as the theoretical ceiling).
Want a quick mental estimate of how long it takes money to double, without reaching for a calculator? Divide 72 by the interest rate:
At 8%, that's 72 ÷ 8 = 9 years to double your money. It's a rough approximation, most accurate for rates roughly between 6% and 10%, but it still holds up reasonably well anywhere under about 20%.
A fixed rate stays the same for the life of the loan or account. A floating (variable) rate moves with some benchmark — historically things like the Fed funds rate or LIBOR — with lenders typically charging a bit above the benchmark and savings accounts typically paying a bit below it, the spread being the bank's margin. This calculator works with fixed rates only.
Whether you contribute at the beginning or end of each compounding period changes your result, because a contribution made at the start of a period earns interest for that entire period, while one made at the end earns nothing until the next period begins. Over many years, that timing difference adds up.
Interest from things like savings accounts, CDs, and most corporate bonds is generally taxable. Even a modest tax rate compounds against you the same way interest compounds for you — it shaves a little off the growth every single period, and that gap widens the longer the money is invested. As a plain illustration, $100 growing at 6% for 20 years with no tax drag at all reaches roughly $320.71; even a small ongoing tax bite on the interest brings that final number down meaningfully.