What is compound growth?
Compound growth is the process where the returns on an investment generate additional returns over time. Each period, growth is calculated on a larger base because prior gains are added to the original amount. It is one of the most powerful financial principles.
What is the compound growth formula?
The basic formula is: Final value = Initial value × (1 + growth rate)^periods. When periodic contributions are added, each contribution also begins to grow from the moment it is made.
Compound growth examples
Investment: €10,000 at 7% annual growth rate over 20 years (no contributions) = €38,697. Growth: €28,697.
Regular savings: €1,000 initial + €200/month at 6% annual growth rate over 10 years = €34,685. Total contributions: €25,000. Growth: €9,685.
How do periodic contributions affect the result?
Regular periodic contributions can significantly increase the final amount. Even small regular additions create a large impact over time due to the power of compounding. Starting early is the most important factor — the longer money works, the greater the compound growth effect.
What is the difference between compound and simple growth?
Simple growth means the profit each period is the same (calculated only on the initial amount). Compound growth means the profit grows exponentially because prior returns also generate returns. Over long periods, the difference becomes very significant.
Where is compound growth applied?
Compound growth is applied in investment planning, pension savings, business growth forecasting, population growth modelling and many other areas. This calculator helps visualise the impact of time and regular contributions on the final result.