Compound Interest Calculator

What compound interest is

Compound interest is interest earned on interest. Each time interest is added to your balance, the next calculation starts from that larger amount, so growth speeds up the longer the money stays invested. In the early years most of the balance is your own money. Later, interest does most of the work, which you can see in the chart above as the light green part of each bar takes over.

The compound interest formula

For a single lump sum, the future value is:

A = P × (1 + r / n)^{n × t}

where P is the starting amount, r the annual interest rate as a decimal, n the number of times interest compounds each year and t the number of years. Regular contributions are added with the future value of an annuity:

FV = PMT × ((1 + i)^N − 1) / i

where PMT is the monthly contribution, i the monthly rate and N the number of months. The calculator works month by month, adds each contribution at the end of the month, and converts quarterly or annual compounding to the equivalent monthly rate so a deposit made mid-quarter still earns its share.

Worked example

Invest R10,000 at 10% a year, compounded annually, and leave it for 10 years: R10,000 × 1.10¹⁰ = R25,937.42. That is R15,937.42 in interest on a R10,000 deposit. With simple interest, which is only ever paid on the original R10,000, you would have R20,000. Switch the same deposit to monthly compounding and it grows to R27,070.41, because interest starts earning interest every month instead of once a year.

How often interest compounds

Banks and investment providers set out how interest is calculated and when it is added to the account. The two are not always the same: interest may be calculated daily but only capitalised monthly, and some fixed-term deposits pay all the interest at maturity. Read the product terms, and where providers quote different compounding periods, compare the effective annual rate rather than the headline rate.

Why starting early matters

Time is the strongest lever in the formula. Someone who saves R1,000 a month at 10% from age 25 to 65 pays in R480,000 and ends with about R6,324,080. Starting at 35 instead, with the same R1,000 a month, means paying in R360,000 and ending with about R2,260,488. The extra ten years cost only R120,000 more out of pocket, yet the final balance is more than double. For retirement planning in particular, try the retirement calculator.

Inflation and the value of your savings

A large future balance can be misleading if prices rise over the same period. At 5% inflation, R1 million in 30 years will buy roughly what R231,377 buys today. Enter an inflation rate above to see every year in today's rand, or use the inflation adjustment calculator to check whether a salary has kept up. Your real return is roughly the interest rate minus inflation, so a savings account that pays less than inflation is losing buying power.

Tax on interest in South Africa

Interest is not tax-free in full. For the 2026/2027 tax year, individuals can earn up to R23,800 of South African interest a year without paying tax if they are under 65, and R34,500 if they are 65 or older. Interest above the exemption is added to taxable income and taxed at your marginal rate, which you can look up on our SARS tax tables page. The calculator shows growth before tax, so for large balances outside a tax-free account the after-tax figure will be lower.

Tax-free savings accounts

A tax-free savings account lets interest, dividends and capital growth build up with no tax at all. From 1 March 2026 you can contribute up to R46,000 a year, with a lifetime limit of R500,000 per person. At the full annual amount you would reach the lifetime limit in just under 11 years. Contributions above either limit attract a 40% penalty tax, and an allowance you do not use in one tax year is lost, not carried forward. Growth inside the account does not count towards the limits, so compounding can take the balance well past R500,000.