Compound Interest Calculator

Interest is compounded monthly. The monthly rate is derived from the annual return so that 12 months of compounding equals exactly the stated annual return. Contributions are added at the end of each month. Growth is calculated over years × 12 months.

With compound interest, the returns you earn are added to your principal, so in the next period you earn returns on both the original capital and the accumulated gains. Over time, this snowball effect accelerates growth significantly — the longer you save, the more powerful the effect.

Regular monthly contributions spread market timing risk, since you buy shares or fund units in both rising and falling markets. Even small monthly amounts add up to a significant sum over the years thanks to the compound interest effect.

Leverage means borrowing a percentage of your own capital to invest a larger total sum: if you borrow 100% of your capital (L=100%), you invest twice your own money. The borrowed amount is invested alongside your own capital and compounds at the same expected return. The loan is interest-only — the principal stays outstanding for the whole period and you pay only the interest each year. That interest is funded from the portfolio, so it eats into your compounding, and your net worth is the portfolio value minus the loan principal you still owe. Because of this, leverage only pays off when your expected return is higher than the loan rate; when the return is lower, you end up worse off than without it. The wipeout drawdown is the immediate market drop that would take your net worth to zero: it equals 100 / (1 + L%), so 100% leverage means a 50% drop wipes out your capital entirely, and 50% leverage means it takes a 67% drop. Leverage amplifies gains when returns exceed the loan rate, but also amplifies losses when they do not.