Tools / Compounding

Compounding calculator

Let time do the heavy lifting

Money that earns a return, then earns a return on that return, grows slowly for years and then very fast. Fees shrink the same curve from the other side.

Your plan example

You end with–
You put in–
Growth earned–
Fees cost you–

Year by year

Value after feesWhat you put inValue with no fees

    How this works

    Each month the calculator adds your saving, then grows the whole pot by one twelfth of the yearly return, after taking one twelfth of the yearly fee. Returns in real markets jump around a lot from year to year; a steady rate is a simplification that shows the shape of compounding, not a forecast.

    Look at the point where the growth line pulls away from what you put in. In the early years almost all of the pot is your own savings. Later, most of it is return on return. That is why the last decade of a long plan often adds more than the first two put together.

    A 1% fee sounds small because it is charged on the whole pot every year, not on the gain. Over thirty or forty years it can take a large slice of the final amount, which the "fees cost you" box shows.