Finance & Investments
Watch your wealth compound over time.
Calculate exactly how much your savings and monthly contributions will grow through the power of compound interest.
$
$
1 yr20 yrs40 yrs
0.5%7.5%15.0%
Future Value
$94,435
Total Interest
$24,435
Total Deposits
$70,000
Growth Projection Chart
Financial Knowledge Base
How Compound Interest Works
Compound interest is often referred to as the "eighth wonder of the world". Unlike simple interest, which is calculated only on the initial principal amount, compound interest earns interest on top of accumulated interest over time.
A = P × (1 + r/n)^(n×t)
Common Mistakes to Avoid
3 Compound Interest Traps
- 1.Starting Late: Delaying investment by even 5 years can reduce total retirement wealth by over 40% due to lost compounding periods.
- 2.Ignoring Management Fees: High expense ratios (e.g. 1.5%+) significantly drag down net compound growth.
- 3.Forgetting Taxes & Inflation: Always measure investment gains net of annual CPI inflation and capital gains taxes.
Frequently Asked Questions
What interest rate should I use for Australian savings?
In 2026, high-interest Australian savings accounts offer rates around 4.50% to 5.50%, while broad index funds (such as ASX 200 or S&P 500) have historically delivered 7% to 10% average annual returns over 10+ year periods.
How frequently does interest compound?
Most Australian bank savings accounts calculate interest daily and compound it into your account monthly.