Compound growth

Steps capital forward at a rate per period, separating growth from money you added. Use it to sanity check a long term plan.

Compounding is growth applied to growth. Each period the return is calculated on a base that already includes the previous periods gains, which is why the curve bends upward rather than climbing in a straight line. Over a handful of periods the effect is barely visible. Over a few hundred it dominates everything, and that gap between the short term and the long term is what makes compounding so consistently underestimated.

The period is whatever you decide it is, and the rate must match it. If you set periods to trading days, the rate is a daily return and sixty periods is roughly three months. If you set it to months, sixty periods is five years. Getting these out of step is the most common error here, and it produces results that look thrilling and mean nothing. A one percent daily return is a completely different proposition from one percent a month.

The contribution field matters more than most people expect, especially on smaller accounts. The growth row and the contributed row are shown separately for exactly this reason. Early on, regular deposits usually do far more work than returns do, and only later does compounding overtake them. Seeing the crossover point is often the most useful thing this calculator does, because it shows when the account starts genuinely working for itself.

Two warnings about reading the output. First, it assumes a constant rate, and real returns are lumpy. The same average return delivered unevenly produces a lower ending balance than a smooth one, because volatility drags on compounded growth. Second, small changes in the rate produce enormous changes over many periods, so a rate that is optimistic by a fraction of a percent can inflate a long projection by a multiple. Prefer a conservative rate and be pleasantly surprised.