See how your savings grow over time with compound interest and regular monthly contributions.
Rates as of Q2 2025 (example)
This calculator shows how an investment or savings balance grows over time when interest is calculated not just on your original amount but also on previously earned interest - and how regular monthly contributions accelerate that growth even further.
This calculator compounds interest monthly: each month, interest is calculated on the current balance and added to it, then your monthly contribution (if any) is added - so future interest is earned on a balance that includes both your contributions and all previously credited interest.
Formula: Each month: Balance = Balance + (Balance × Monthly Rate) + Monthly Contribution, where Monthly Rate = Annual Rate ÷ 12. Total Growth = Final Balance − Total Contributions (Initial Investment + sum of all Monthly Contributions).
Example: Starting with A$10,000 and contributing A$200 per month at a 5% annual interest rate (example rate — enter your own assumption) for 20 years, the balance would grow to about A$109,333.14. Of this, A$58,000 represents your total contributions (initial plus monthly), and roughly A$51,333.14 represents growth from compound interest. (Note: this example is for illustration purposes only - actual returns vary and aren't guaranteed.)
Compound interest is the engine behind growth in high-interest savings accounts, term deposits, and most investments - the earlier and longer you let money compound, the more dramatic the effect, since growth on growth accelerates over time. In Australia, interest earned on savings accounts and term deposits is generally taxable income, taxed at your marginal tax rate (unless held within a tax-advantaged structure like superannuation, where investment earnings are typically taxed at a concessional rate of up to 15% while in the accumulation phase - see our Superannuation Calculator). For share investments, dividend reinvestment (especially with franking credits attached to fully franked dividends) can also create a compounding effect similar to interest reinvestment, though the tax treatment differs from interest income. When comparing savings products, watch for "bonus rate" structures common with Australian online savings accounts, which often require meeting conditions (like a minimum monthly deposit or no withdrawals) to earn the advertised higher rate - falling short of these conditions in any month typically drops you to a much lower base rate for that month, reducing your effective compounding.
Simple interest is calculated only on the original principal amount, so it grows by the same dollar amount each period. Compound interest is calculated on the principal plus all previously accumulated interest, so the growth accelerates over time - the more frequently interest compounds (e.g., monthly versus annually), the faster the balance grows for the same nominal rate.
Yes - interest earned on savings accounts and term deposits is generally treated as assessable income and taxed at your marginal tax rate, reported on your annual tax return. This calculator shows pre-tax growth; your actual after-tax growth will be lower depending on your tax bracket, unless the funds are held within a concessionally-taxed structure like superannuation.
Many Australian online savings accounts offer a higher "bonus" rate only if you meet certain conditions each month (such as depositing a minimum amount and making no withdrawals). If you miss the conditions in a given month, your balance typically earns only a much lower base rate for that month - which can significantly reduce your effective compounding over time compared to consistently earning the bonus rate.
No - this calculator shows nominal growth (in actual dollar terms) without adjusting for inflation. To understand the real (inflation-adjusted) growth of your purchasing power, use this calculator alongside our Inflation Calculator, or use a real (inflation-adjusted) rate of return as your interest rate assumption.
For the same stated annual rate, more frequent compounding (e.g., monthly versus annually) results in slightly higher growth, because interest is added to the balance more often, allowing it to start earning its own interest sooner. This calculator compounds monthly, which is common for savings accounts, though some products may compound daily or annually.
Generally, if your debt's interest rate is higher than the rate you'd earn on savings, paying down that debt first usually provides a better "return" (in the form of interest saved) than investing - especially for high-interest debt like credit cards. For lower-interest debt (like some mortgages), the comparison is closer and depends on your risk tolerance and goals. Consider both this calculator and our Debt Payoff Calculator to compare scenarios.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. The interest rate used is an example only and does not represent a return offered by any specific account or investment - actual returns vary, are not guaranteed, and interest earned outside superannuation is generally subject to tax at your marginal rate. Always consult a qualified financial adviser for advice specific to your circumstances.