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General Interest Calculator

Project compound growth while accounting for inflation and taxes. Choose compounding intervals from daily to continuous compounding.

Future Portfolio Value (Nominal)
$294,437

Real Value (Adjusted for Inflation): $179,686

Total Contributions$130,000
Interest Earned$193,455
Taxes Paid$29,018
Wealth Multiplier2.3x

Growth Specifications

Recurring Contributions & Market Drags

Investment Projections
Projections & Actions
Financial Analysis:Your investment grows to $294,437 nominally. After adjusting for a 2.5% inflation rate, the purchasing power is worth $179,686 in today's dollars. Total taxes paid at a 15% tax rate amount to $29,018.
Compounding Schedule
YearStarting BalanceDeposit AddedInterest EarnedTax PaidEnding BalanceReal Value
Year 1$10,000+$6,000+$1,055-$158$16,897$16,485
Year 2$16,897+$6,000+$1,627-$244$24,280$23,110
Year 3$24,280+$6,000+$2,240-$336$32,184$29,886
Year 4$32,184+$6,000+$2,896-$434$40,646$36,823
Year 5$40,646+$6,000+$3,599-$540$49,705$43,932
Year 6$49,705+$6,000+$4,350-$653$59,403$51,223
Year 7$59,403+$6,000+$5,155-$773$69,785$58,707
Year 8$69,785+$6,000+$6,017-$903$80,899$66,398
Year 9$80,899+$6,000+$6,940-$1,041$92,798$74,306
Year 10$92,798+$6,000+$7,927-$1,189$105,536$82,444
Year 11$105,536+$6,000+$8,984-$1,348$119,173$90,827
Year 12$119,173+$6,000+$10,116-$1,517$133,771$99,466
Year 13$133,771+$6,000+$11,328-$1,699$149,400$108,378
Year 14$149,400+$6,000+$12,625-$1,894$166,131$117,576
Year 15$166,131+$6,000+$14,014-$2,102$184,043$127,075
Year 16$184,043+$6,000+$15,500-$2,325$203,218$136,893
Year 17$203,218+$6,000+$17,092-$2,564$223,747$147,045
Year 18$223,747+$6,000+$18,796-$2,819$245,723$157,549
Year 19$245,723+$6,000+$20,620-$3,093$269,250$168,423
Year 20$269,250+$6,000+$22,573-$3,386$294,437$179,686

How Compound Interest Accumulates

Unlike simple interest, which is calculated solely on the initial principal, compound interest accrues on the principal plus all interest already earned. This creates a compounding effect that curves upward over time.

The Mathematics of Compound Growth

Standard compound interest uses the formula:

A = P (1 + r/n)^(nt)

Where A is the future value, P is the starting principal, r is the annual interest rate, n is the compounding frequency per year, and t is the term in years. For continuous compounding, the formula becomes:

A = P · e^(rt)

Accounting for Tax Drag and Inflation

Real wealth creation requires looking beyond nominal figures:

  • Tax Drag: If you invest in a taxable account, taxes are deducted from interest gains, lowering the rate at which you compound interest. Our tool deducts tax yearly to simulate taxable brokerage accounts accurately.
  • Inflation Drag: Inflation erodes the purchasing power of your money over time. A nominal balance of $100,000 in 20 years is worth less in today's dollars. Our solver calculates the discounted purchasing power based on your inflation expectation.

Frequently Asked Questions About Interest

What is compound interest?

Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods. Unlike simple interest, it grows exponentially over time because you earn interest on interest.

How does tax drag affect compound interest?

Tax drag refers to the reduction in investment growth caused by annual tax liability on earned interest or dividends. By paying tax annually rather than deferring it, you reduce the capital available for future compounding, slowing portfolio growth.

How does compounding frequency impact returns?

The more frequently interest compounds, the faster your investment grows. Daily compounding yields slightly more interest than monthly compounding, which in turn beats quarterly and annual compounding, because interest is added back to capital faster.

Can this handle tax drag on investments?

Yes. Apply custom tax rates to calculate after-tax investment growth with daily to continuous compounding.