How does compounding work

Page reading time: 5 minutes

The compound interest calculator helps you work out:

- what money you'll have if you save a regular amount
- how compounding increases your savings interest
- the difference between saving now and saving later
- how to calculate compound interest

### Results

'+ '

### Alternative strategy

'+ '

'+ '

'+ '

'+ '

'+ '

'+ '

#### Your strategy:

'+ '

Initial deposit: $'+formatNumber(pv, 0, 0, true)+'

'+ '

Regular deposits: $'+formatNumber(savings, 0, 0, true)+'

'+ '

Total interest: $'+formatNumber(interest, 0, 0, true)+'

'+ '

Total savings: $'+formatNumber(fv, 0, 0, true)+'

'+ '

#### Alternative strategy:

'+ '

Initial deposit: $'+formatNumber(pv, 0, 0, true)+'

'+ '

Regular deposits: $'+formatNumber(aSavingsExp[x-1], 0, 0, true)+'

'+ '

Total interest: $'+formatNumber(aInterestExp[x-1], 0, 0, true)+'

'+ '

Total savings: $'+formatNumber(aFvExp[x-1], 0, 0, true)+'

'+ '

After '+this.x+' '+s+' | Your strategy | Alternative |
---|---|---|

Initial deposit | $'+ formatNumber(this.points[2].y, 0, 0, true) +' | $'+ formatNumber(this.points[5].y, 0, 0, true) +' |

Regular deposits | $'+ formatNumber(this.points[1].y, 0, 0, true) +' | $'+ formatNumber(this.points[4].y, 0, 0, true) +' |

Total interest | $'+ formatNumber(this.points[0].y, 0, 0, true) +' | $'+ formatNumber(this.points[3].y, 0, 0, true) +' |

Total | $'+ formatNumber(this.points[0].y + this.points[1].y + this.points[2].y, 0, 0, true) +' | $'+ formatNumber(this.points[3].y + this.points[4].y + this.points[5].y, 0, 0, true) +' |

After '+this.x+' '+s+' | Your strategy |
---|---|

Initial deposit | $'+ formatNumber(this.points[2].y, 0, 0, true) +' |

Regular deposits | $'+ formatNumber(this.points[1].y, 0, 0, true) +' |

Total interest | $'+ formatNumber(this.points[0].y, 0, 0, true) +' |

Total | $'+ formatNumber(this.points[0].y + this.points[1].y + this.points[2].y, 0, 0, true) +' |

## Disclaimers

**A model not a prediction**. Results are only estimates, the actual amounts may be higher or lower. We cannot predict things that will affect your decision, such as changing interest rates.- This calculator is not intended to be your sole source of information when making a financial decision. Consider whether to get advice from a licensed financial adviser.

## Assumptions

- Initial deposit is made today.
- Regular deposits are made at the end of year, month, fortnight, week, or day (according to the deposit frequency you set).
- Interest is credited either monthly or annually, in line with standard industry practice.
- The delayed start comparison feature will have the same regular deposit frequency.

## FAQs - frequently asked questions

#### Q. How does compound interest work?

A. See compound interest to find out more.

#### Q. Are the results of the compound interest calculator shown in today's dollars?

A. The results of this calculator are shown in future dollars. No adjustment has been made for inflation.

#### Q: Why have you changed the calculator?

A: We upgrade our calculators regularly due to technological advances, regulatory changes and customer feedback. Once a calculator has been upgraded, the old version is no longer available.