Compound growth and inflation

This educational tool is free to use without an account. Change one input at a time, compare results and read the example and assumptions below. Results are illustrations, not forecasts or personal offers.

Compound interest is earning interest on interest that has already been added.

Educational calculators only. Assumptions are not a quote or financing approval.

Using the result

Start with fictional amounts that are easy to check without a calculator. Write down the inputs and the first result, then change just one assumption. This helps you identify what caused the difference instead of changing several factors together. Check whether amounts are monthly or annual, which currency is used and which costs are included. Two decimal places do not make an assumption certain. Finally, explain the result in your own words, identify missing information and note what you would need to verify before using real money.

Explanation and example

The calculation depends on the rate and the compounding frequency. In investments returns can vary and be negative, so an example with fixed interest is just an illustration. Fees, taxes and withdrawals change the outcome.

Practice example

Assuming a constant 5% per year: 100 ₪ becomes 105 ₪ after one year and 110.25 ₪ after two years, before costs.

Assume a constant 10% return each year with no costs for this exercise. An amount of 100 becomes 110 after one year and 121 after two, because the second year uses 110 as its base. Withdrawing the first gain changes that base. This is a mathematical assumption, not a promise about markets. Add a losing year to see how a smaller base changes the next calculation.

Calculate the amount after the third year under the same assumption.

Check your understanding

In the example, how much is there after two years?

Does the 5% example guarantee a market return?

Full lesson