Compound Return Calculator
Compounding is returns earning returns. Over a few years a modest edge pulls far ahead of a linear one — and the same mechanism works in reverse, which is why a string of consistent losses is so hard to climb out of. This calculator projects a starting balance forward at a yearly return, with optional contributions.
Compounds once per year at a constant rate — a simplification. Real returns vary year to year, and a run of losses compounds against you the same way.
- • Each year, the balance grows by the return, then any contribution is added: balance × (1 + return) + contribution, repeated for the number of years.
- • Profit = final balance − everything you put in. Growth = final ÷ invested.
Worked example: $10,000 at 8% a year for 10 years, no contributions, grows to about $21,600 — more than double, from returns compounding on returns.
Uses a constant yearly rate — a simplification. Real returns vary year to year, and a big early loss compounds against you the same way gains compound for you. Educational tool, not advice.
A calculator shows what a rule should do on paper. Whether a strategy actually beats simply buying and holding — costs on, losses shown, no hindsight — is a different question, and the only one that pays. Test one on real data, free, no sign-up.