Compound Interest Calculator for European Investors

How to use this compound interest calculator

This compound interest calculator lets you test simple long-term investing scenarios. Enter your starting amount, monthly contribution, investment period, expected annual return and inflation rate to estimate how your portfolio could grow over time

Initial investment

The lump sum you’re starting with today. Don’t have a large amount saved yet? Set this to €0 and focus on your monthly contribution — small, consistent amounts still build significant wealth over time.

Monthly contribution

How much you plan to invest each month. This is often the most powerful lever in your calculation — regular contributions amplify compounding dramatically, especially over 10+ years. Even €50/month makes a real difference.

Investment period

The number of years you plan to stay invested. Time is the single biggest factor in compound interest — a 30-year horizon will vastly outperform a 15-year one, even with the same monthly amount. Try sliding this first to see how it changes your outcome.

Expected annual return

Your assumed average yearly return, expressed as a percentage. For a globally diversified index fund (like MSCI World or S&P 500), a historical average of 7–8% is commonly used as a planning assumption — but past performance is never a guarantee. Try a conservative 5% and an optimistic 10% to see the range of possible outcomes.

Annual inflation rate

Inflation quietly erodes your purchasing power over time. The European Central Bank targets 2% annually — we use this as the default. The inflation-adjusted figure in your results shows what your final portfolio is actually worth in today’s money, which is the number that really matters for planning your retirement or financial independence.

Real-world investment scenarios

Not sure where to start? These five scenarios show how different starting points and monthly contributions could grow over 20 to 30 years — all based on a 7% annual return. Use them as a reference, then adjust the calculator above to match your own situation.

Frequently Asked Questions

What is compound interest?

Compound interest means earning returns not just on your original investment, but also on the returns you’ve already accumulated. Each year, your gains become part of the base that generates future gains. Over long periods, this creates exponential rather than linear growth — which is why starting early matters far more than investing large amounts later.

What is the difference between compound and simple interest?

Simple interest is calculated only on your original investment. Compound interest is calculated on your investment plus all the returns you’ve already earned — so your gains generate more gains.

With simple interest, 10,000€ at 7% earns €700 every year, reaching 24,000€ after 20 years. With compound interest, the same investment reaches €38,697 — over 14,000€ more, without investing anything extra. The longer your time horizon, the bigger that gap becomes.

How does compound interest work in practice?

If you invest €10,000 at a 7% annual return, you earn €700 in year one. In year two, you earn 7% on €10,700 — not on the original €10,000. That extra €49 seems small, but over 20 or 30 years the effect compounds into tens of thousands of euros. Adding monthly contributions accelerates this further, because each new deposit starts compounding immediately.

What annual return should I use for long-term investing in Europe?

Most European long-term investors use between 5% and 8% per year as a planning assumption. A globally diversified index fund tracking the MSCI World has historically averaged around 7–8% annually before inflation and fees. A more conservative estimate of 5–6% is often used to account for costs, taxes, and market variability. There is no guaranteed return — use multiple scenarios to understand the range of outcomes.

Does this calculator include inflation?

Yes. The calculator shows both the nominal final value and an inflation-adjusted figure. The inflation-adjusted value estimates what your portfolio would be worth in today’s purchasing power, assuming a 2% annual inflation rate by default — in line with the European Central Bank’s target. You can adjust this rate to model different scenarios.

How much should I invest each month to build long-term wealth?

There is no universal answer, but even €50 to €100 per month invested consistently over 20 or 30 years can grow into a significant portfolio through compounding. The amount matters less than the consistency and the time horizon. Use the calculator above to model your specific situation — small increases in monthly contributions have a disproportionate impact over long periods.

Does this calculator include taxes or broker fees?

No. This calculator does not include income tax, capital gains tax, broker commissions, ETF total expense ratios (TER), dividend withholding tax, or currency conversion costs. In practice, these can reduce your net return by 0.5% to 2% per year depending on your country, broker, and fund choice. For a realistic projection, reduce your expected annual return by your estimated total cost before running the calculation.

Is compound interest guaranteed?

No. Compound interest as a mathematical concept is predictable, but the investment returns that drive it are not. Market values fluctuate, and actual returns over any given period may be higher or lower than your assumption. This calculator is a projection tool, not a financial forecast. For long-term planning, running both an optimistic scenario (8–10%) and a conservative one (4–5%) gives a more realistic picture than a single estimate.

Is this calculator suitable for ETF investors in Europe?

Yes. This calculator is designed with European retail investors in mind. It uses euros by default, applies ECB inflation assumptions, and models the kind of monthly DCA (dollar-cost averaging) strategy common among ETF investors using platforms like DEGIRO, Trade Republic, or similar European brokers. It does not account for country-specific tax rules — consult a local tax advisor for personalised guidance.