Compounding Calculator
What a fixed return per period compounds into over time, the total growth, and how far the compounding curve pulls away from simple, non-reinvested growth. A lesson in the maths, not a forecast of your account.
By Joey van Diest, founder and editor Updated
- Final balance
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- Total return
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- Total added
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- Compounding gain
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The formula
each period: balance = balance × (1 + rate) + contribution
with no contributions: final = start × (1 + rate)periods
Compounding means each period earns a return on the previous period's gains, not just on the original stake. Start with $10,000 and earn 5% a period: after one period you have $10,500; the next 5% is earned on $10,500, not $10,000, and so on. After 24 periods the account is $10,000 × 1.0524 ≈ $32,251, a 222% total return from a rate that never changed. Simple growth, taking the 5% out each period instead of reinvesting, would add only 24 × 5% = 120%. The gap between the two is the compounding gain.
The curve is the point. It starts almost flat and bends sharply upward, because the base it grows on keeps getting larger. That shape is why long horizons and honest, modest rates beat short horizons and heroic ones, and why overstating your expected return by a few points warps the projection so badly. Change the rate from 5% to 8% above and watch the final balance roughly double; the exponential does not forgive optimism.
The honest caveat
No trading account grows in a smooth line. Real returns are lumpy, with losing streaks and drawdowns that a constant-rate model cannot show. This calculator is a lesson in the mathematics of compounding, not a forecast: it tells you what perfect consistency would produce, which is useful precisely as a benchmark for how rare perfect consistency is. To see how variance around an average return can threaten the account long before compounding pays off, run the risk of ruin simulator, and size each trade with the position size calculator so no single period can end the compounding early.
Forex, crypto and daily compounding plans
Nothing in the tool is tied to a month or a year. A “period” is whatever you make it: a trading day for a forex daily-compounding plan, a single trade, a week, a month. Set the return per period and the number of periods to match. That flexibility is also where the danger lives. Plug in 5% a day for 30 days and the calculator faithfully turns $1,000 into more than $4,300, which is exactly the fantasy that daily-target and binary “compounding plan” marketing sells. The arithmetic is right; the input is not. No account earns a flat 5% every day, and the honest caveat above is the whole reason this page exists.
SIPs, savings and compounding frequency
The same engine models an investment plan or a savings account, not only a trading account. For a monthly SIP or a regular deposit, put the contribution in add per period and set the periods to the number of months; the balance compounds and your deposit is added each period. Two related terms turn up around this: APY is just the growth expressed as one annual percentage after a year of compounding at your chosen frequency, and CAGR runs the formula backwards, the single constant rate that takes a real starting balance to a real ending one. Continuous compounding is the mathematical limit of shrinking the period toward zero, and at ordinary rates it lands only a hair above monthly or daily compounding.
Frequently asked questions
- Is a steady percentage per period realistic?
- Honestly, rarely. This calculator assumes the same return every period, which no real trading account delivers, results are lumpy, with losing streaks and drawdowns that break the smooth curve. Its value is not as a forecast but as a lens: it shows what consistency would compound into, and just how sensitive the outcome is to the rate. Treat the output as an illustration of the mathematics, not a projection of your account.
- Why does a small change in the rate matter so much?
- Because compounding is exponential. Over 24 periods, 5% per period grows the account about 3.2x, while 10% grows it about 9.8x, double the rate is far more than double the result. That leverage on the rate is why traders chase higher returns, and also why overstating your expected return produces wildly optimistic projections. Small, honest numbers compound into large ones on their own.
- Should I add deposits?
- You can enter a contribution per period to model adding capital as you go, which is often a bigger driver of account growth than returns, especially early on. The calculator compounds the balance and adds the contribution each period. Turning off contributions shows pure compounding of trading returns alone.
- What about taxes, fees and drawdowns?
- Not modelled. Real net growth is lower after trading costs and taxes, and the path is never the smooth curve shown here, an account that averages 5% a period will still suffer drawdowns that test your discipline along the way. Use the risk of ruin simulator to see how variance around an average return can threaten the account before the compounding ever pays off.
- Can I use this for a forex or crypto daily compounding plan?
- Yes. Set one period to one day and the number of periods to how many trading days you are modelling. Just remember what the result means: a plan that assumes a fixed percentage every single day compounds into enormous numbers precisely because a fixed daily percentage is not real. Live returns are lumpy and include losing days the model cannot show. Use it to understand the mathematics, not as a target, and pair it with the risk of ruin simulator to see how normal variance threatens the account long before the projection arrives.
- Does it work for a SIP or monthly savings?
- Yes. Enter your regular deposit in the add-per-period field and set the periods to the number of months, or whatever interval you contribute on. The calculator compounds the running balance and adds your contribution each period, which is the mechanics of a systematic investment plan or a recurring deposit. The one simplification is a constant return, whereas a market-linked SIP earns a different amount each period, so treat the fixed rate as an average rather than a promise.
- How does this relate to APY, CAGR and continuous compounding?
- They are the same idea measured differently. This tool compounds a rate over discrete periods that you define. APY is that growth expressed as one annual percentage after a year of compounding. CAGR is the reverse question: given a real start and end balance, what single constant rate connects them? Continuous compounding is the limiting case where the period shrinks toward zero, and at everyday rates it differs from monthly or daily compounding by a negligible amount.
Method and limitations
Pure arithmetic on your inputs, computed in your browser; nothing is fetched and nothing you type leaves the page. The model assumes a constant return every period, which real accounts do not deliver, and excludes taxes, fees and drawdowns. Read it as an illustration of how compounding works, not a projection of your results. This is an information tool, not financial advice.
This tool runs entirely in your browser. Nothing you enter is sent to us or stored.
For general information and education only. This is not financial advice and not a recommendation to buy or sell anything. This tool is provided as is, with no warranty of accuracy: like any software it can contain errors, so always verify figures against your broker or the original source before acting on them. Trading and investing carry risk, including the risk of losing more than your initial outlay.
Spotted an error? Email [email protected] and it will be corrected. Maintained by Joey van Diest.