Compound Interest Calculator

See how compound interest could grow your money

Compound interest is the return earned on both your original amount and the returns that have already been added. Over time, this can help your savings or investments grow faster than they would with simple interest.

Our compound interest calculator shows how a starting balance and regular top-ups could grow over your selected timeframe. You can adjust the return rate, compounding frequency and contribution amount to compare different scenarios.

The result is an estimate only. Actual investment returns can vary, and the calculator does not predict the performance of a particular savings account, investment, KiwiSaver fund or financial product.

How to use the compound interest calculator

Enter the amount you are starting with and the number of years you plan to save or invest. Add an estimated annual return and select how often that return compounds.

You can then enter a regular top-up and choose whether it will be added weekly, fortnightly, monthly or annually.

The calculator will estimate:

• The potential future value
• The total amount you contributed
• The amount earned through compound returns
• How the balance could change from year to year

Try changing the timeframe, return rate or regular contribution to see how each factor affects the result.

How does compound interest work?

Compound interest means earning a return on your previous returns as well as on the money you originally contributed.

For example, if you earn a return in the first year and leave it invested, the following year’s return may be calculated using both your original balance and the return earned in the first year. This compounding effect can become more significant over longer periods.

The three factors that generally have the greatest effect are the amount contributed, the rate of return and how long the money remains invested.

Why regular top-ups can make a difference

You do not necessarily need a large starting amount to benefit from compounding. Adding smaller amounts regularly can increase the amount invested and give those contributions an opportunity to earn returns.

Use the calculator to compare different contribution frequencies and amounts. Even a modest increase in regular top-ups may make a meaningful difference over a long timeframe.

How often should interest compound?

The calculator allows you to select daily, monthly, quarterly, half-yearly or annual compounding.

More frequent compounding may produce a slightly higher result when the starting amount, return rate and timeframe remain the same. However, the difference may be relatively small compared with the effect of contributing more or remaining invested for longer.

The actual compounding method will depend on the savings account, investment or financial product.

Assumptions used in this calculator

The calculator uses the following assumptions:

• The starting amount is deposited or invested at the beginning of the selected timeframe.
• The annual return rate remains unchanged for the entire period.
• Returns compound at the frequency selected: daily, monthly, quarterly, half-yearly or annually.
• Regular top-ups are made at the end of each selected contribution period.
• Top-ups continue at the same amount and frequency for the entire timeframe.
• All returns remain invested and continue to compound.
• No withdrawals are made during the selected timeframe.
• The calculation is shown before tax.
• Fees, charges and adviser costs are not included.
• Inflation is not included.
• No allowance is made for changing interest rates, variable investment returns or market movements.
• Dollar results are rounded to the nearest whole dollar.

Because the calculator uses a constant return rate, it will produce a smooth projection. Real investment returns typically vary from year to year and may include periods of negative performance.

Important information

This calculator provides estimates for general information only. It does not provide personalised financial advice or predict the performance of a particular investment, savings account or financial product.

Actual results may differ because of changing interest rates, investment performance, market conditions, tax, fees, withdrawals and contribution changes. Investment values can rise or fall, and you may receive back less than you invested.

Consider obtaining personalised financial advice before making an investment decision.

Want help growing your wealth?

Small changes can make a meaningful difference over time. Talk to an Invicta Financial adviser about your savings, investment and long-term financial goals.