Compound Interest Calculator

Compound interest is interest earned on both your original capital AND the interest you’ve already accrued. In the first year you earn interest on R10,000. In the second year you earn interest on R10,000 plus last year’s interest. The earlier years don’t feel dramatic; the later years do.

The formula for final value of a single lump sum:

FV = PV × (1 + r)ⁿ

Where FV is future value, PV is present value (your starting amount), r is the annual rate (as a decimal), and n is the number of years. For monthly contributions, the formula is slightly longer, but calculators handle it.

The difference between starting at 25 versus 35 is dramatic. Two savers both put R2,000 a month into a 10%-returning fund:

From 30 to 40 years, the portfolio doesn’t just grow linearly — it nearly triples, because the interest is compounding on a much bigger base. The first decade was the slowest; the last decade was the biggest. This is why starting early beats contributing more later, almost every time.

A back-of-envelope formula for estimating growth without a calculator:

• Rule of 72: years to double your money ≈ 72 ÷ rate. At 8%, your money doubles in ~9 years. At 10%, ~7.2 years. At 12%, ~6 years.
• Rule of 115: years to triple your money ≈ 115 ÷ rate. At 10%, triples in ~11.5 years. At 8%, ~14.4 years.

These rules work for any growth series — investment returns, inflation, GDP, anything that compounds. At 6% inflation, the rand’s purchasing power halves every ~12 years (72 ÷ 6 = 12). That’s why holding cash long-term is a loss.

Three different “rates” get tossed around. Know the difference:

A “12% return” in nominal terms during a 6% inflation year is a 6% real return — half as good as it sounds. Always adjust for inflation when comparing long-horizon investments.

Rough long-term nominal-return assumptions for planning purposes (these fluctuate year to year; don’t treat as guarantees):

• Cash / money market: prime − 1% to prime + 2% (roughly 10–13% in 2026 conditions).
• SA government bonds (ALBI): 10–12% nominal, depending on yield curve.
• SA equities (JSE Top 40): 10–13% long-term nominal (very lumpy year to year).
• Global equities (MSCI World): 9–12% nominal in ZAR terms (includes currency effect).
• Balanced fund (typical Reg 28 pension): 9–11% nominal long-term.
• Residential property (capital growth only, excl. rent): 6–8% nominal long-term.

Subtract ~5–6% for expected long-run SA inflation to get real return. A 10% nominal portfolio in SA = ~4–5% real long-term. That’s the number that actually buys you more stuff in the future.

1. Delaying to save more per month. “I’ll save when I earn more” is almost always worse than “I’ll save what I can now.” Ten years of head start at a smaller amount beats a decade less at a bigger amount.
2. Ignoring inflation. R10 million in 40 years at 6% inflation has the spending power of roughly R970,000 today. Plan in real terms.
3. Withdrawing to “rebalance” after a market dip. Compounding needs uninterrupted time in the market. Every withdrawal resets the clock.
4. Picking “safe” low-return products for 40-year horizons. Cash earns 8–10% in SA but barely beats inflation. For long horizons, the risk is NOT being in equities — not the other way around.

Enter a starting amount (or zero), a monthly contribution, an expected annual return, and a time horizon. The calculator applies the monthly-compounding formula and returns the future value, total contributed, and interest earned.

For real-return planning, subtract expected inflation from the rate input (use ~6% for long-run SA CPI). A “10% nominal, 6% inflation” scenario is more realistically modelled as 4% real — and the compounded numbers are dramatically smaller, but more honest.

• SARB — Inflation statistics and monetary policy
• StatsSA — Consumer Price Index (CPI) history
• Financial Sector Conduct Authority — investment performance disclosures