Compound Interest Calculator

Compound interest is the interest your money earns plus the interest earned on the interest already accumulated. Unlike simple interest, the base you earn on grows every period, producing exponential growth over the long term.

The basic formula is FV = C × (1 + i)^n, where C is the initial capital, i the interest rate per period and n the number of periods. If you make periodic contributions, an annuity calculation is added. This calculator computes it month by month automatically.

It depends on the return and the term. Investing €100 a month for 30 years at 7% annually you would accumulate around €118,000, of which only €36,000 would be your contributions and the rest, interest. You can calculate your exact case in the tool.

Historically, a global or S&P 500 index fund has returned around 7%-10% per year on average over the long term (before inflation). It is not guaranteed: there are negative years, but the decades-long average has been positive. Past returns do not guarantee future ones.

According to the 4% rule, you need roughly 25 times your annual spending. If you spend €2,000/month (€24,000/year) you would need about €600,000. The Goal tab of the calculator estimates your monthly income based on your projected wealth.

Statistically, investing all at once beats DCA in about 2 out of 3 cases, because the money spends more time invested. However, DCA (contributing gradually) reduces emotional risk and is the natural approach when you invest your salary month by month.

You are only taxed when you redeem (sell) at a gain, not on the annual appreciation. Also, you can switch between funds without being taxed. The gain is included in the IRPF savings tax base with brackets from 19% to 28% depending on the amount.

The TER (Total Expense Ratio) is a fund's total annual fee. Although it looks small, compounded over decades it is huge: going from 0.2% to 1.5% can cost you more than 15% of your final wealth. Index funds stand out for their very low TER.