Compound Interest & Investment Calculator

The Power of Compound Interest

Compound interest is often called the “eighth wonder of the world.” Unlike simple interest, compound interest earns returns on your returns — so your money grows exponentially over time.

The key variables are time and rate. A 1% difference in return rate — say 7% vs 8% — makes a massive difference over 30 years. That's why choosing low-fee index funds (0.1% p.a.) over managed funds (1.5% p.a.) can add hundreds of thousands to your final balance.

Regular contributions are equally powerful. Adding $500/month to an investment growing at 7% for 30 years produces a balance of nearly $600,000 — even though you only contributed $180,000. The remaining $420,000 is pure compound growth.

Typical Australian Investment Returns

• High-Interest Savings Account: 4–5% p.a. (variable, follows RBA cash rate). Low risk, instant access. Best for emergency funds and short-term goals.
• Australian shares (ASX 200): ~9–10% p.a. average over 20+ years (including dividends). Higher short-term volatility but strong long-term returns.
• Diversified index fund: ~7–8% p.a. average. Lower volatility than all-equities. Vanguard, BlackRock, and BetaShares offer low-fee options on the ASX.
• Investment property: ~6–8% p.a. total return (rental yield + capital growth), varies significantly by location and leverage.
• Superannuation (balanced): ~7–9% p.a. average, with a 15% concessional tax rate — making it one of the most tax-efficient investment vehicles in Australia.