What the compound calculator shows
Compounding means each month's return is earned on a balance that already includes earlier gains. Over long periods even small monthly percentages add up, and regular deposits speed up the effect. The calculator projects that growth from a starting balance, a monthly return, a monthly deposit and a number of months — and shows a lower scenario beside it, because real returns are never steady.
How to use it
Enter your starting balance, the monthly return you want to model, the amount you add each month and the time horizon. The chart draws three lines: the projection, the same plan at half the return, and your deposits alone. The panel shows the final balance, the total deposited, the total gain, the equivalent yearly return and the half-return result.
The formula
Month by month:
next balance = balance × (1 + monthly return) + deposit
Which is equivalent to:
final = start × (1 + r)^n + deposit × ((1 + r)^n − 1) ÷ r
yearly equivalent = (1 + r)^12 − 1
Deposits are added at the end of each month, after that month's return.
Worked example
Start with $10,000, model 2% per month and add $500 at the end of every month for 24 months:
- 1.02^24 ≈ 1.6084, so the starting balance grows to about $16,084
- The deposits grow to about $15,211
- Final balance ≈ $31,295, from $22,000 deposited: a gain of about $9,295
- 2% a month is equivalent to roughly 26.8% a year
At 1% a month the same plan ends near $26,184. With no return at all, you would have your $22,000 of deposits.
Keeping the projection honest
A steady monthly return is an assumption, not a description of trading. Real results arrive unevenly — winning months, losing months, drawdowns. Two accounts with the same average return can end far apart depending on the order of results, and a 30% drawdown needs a 43% gain just to recover. Use the calculator to see how time, deposits and return interact, not as a forecast.
Sustaining even 2% a month (about 27% a year) over many years is rare among professional funds. If a plan only works at 5% or 10% a month, it depends on returns that are seldom achieved; a modest return combined with regular deposits is a more grounded way to model growth.
Common mistakes
- Annualising a great month. One 15% month does not make a 435% year.
- Forgetting withdrawals, taxes and fees. Each of them reduces the base that compounds.
- Raising risk to hit a target. Larger positions increase the chance of a deep drawdown that interrupts compounding entirely — see the drawdown calculator.
- Ignoring variance. Look at the lower line and ask whether you would stick with the plan if that is what happened.