Compound interest is the most powerful force in personal finance – and the most underappreciated advantage of long-term saving. €10,000 at 5% interest: after 10 years €16,289, after 30 years €43,219, after 50 years €114,674. The money doubles roughly every 14 years. Our calculator shows you the full power of compounding.
Step by Step: How to Use the Interest Calculator
- Enter the starting capital: For example €10,000.
- Enter the interest rate: Annual rate in %, for example 5.
- Enter the duration: In years, for example 20.
- Compound interest formula: K_n = K_0 × (1 + p/100)^n = 10,000 × 1.05^20 = €26,533.
- Monthly contributions: Optional savings plan – the calculator shows the final capital with regular monthly deposits.
Practical Examples
Pension savings comparison: €20,000 invested at age 28 at 6% return (historical equity index ETF). At age 68: 20,000 × 1.06^40 = €205,714.
Savings plan €100/month, 5% p.a., 30 years: Total contributions: €36,000. Final value (annuity formula): approx. €83,226 – more than double the amount invested.
Rule of 72: At what interest rate does money double in 10 years? 72/10 = 7.2%. At 7.2% p.a. capital doubles in approximately 10 years.
Compound Interest Final Capital (K_0 = €10,000)
- 2% p.a., 20 years: €14,859
- 4% p.a., 20 years: €21,911
- 6% p.a., 20 years: €32,071
- 8% p.a., 20 years: €46,610
- 6% p.a., 30 years: €57,435
Frequently Asked Questions (FAQ)
What is the Rule of 72 and how does it work?
The Rule of 72 is a quick mental calculation: divide 72 by the interest rate to get the approximate number of years until your capital doubles. At 4%: 72/4 = 18 years. At 8%: 72/8 = 9 years. It works well for rates between 1% and 20%.
How does compound interest differ from simple interest?
Simple interest is calculated only on the original principal (linear growth). Compound interest adds earned interest to the principal, so the interest itself earns interest (exponential growth). Over 10 years at 5%: simple = €15,000; compound = €16,289 (+€1,289).
What is a realistic return rate for long-term investing?
Savings accounts/fixed deposits (2024): 3–4%. Government bonds (10-year): 2.5–3.5%. Broadly diversified equity ETFs (historical): 7–10% p.a. (before inflation). After inflation (2–3%): real equity return approx. 5–7% p.a.
