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Investment Calculator — Compound Interest & Growth Projection

Project investment growth with compound interest.

Investment Inputs

$
$

Contribution frequency

%

Expected yearly growth. Historical average for diversified shares is ~7–8% p.a.

yrs

Compounding frequency

How often interest is added to your balance. More frequent compounding means faster growth.

Results shown in

Showing actual future dollar amounts.

%

Used to calculate today’s dollar equivalent.

How the Investment Calculator Works

Why Use an Investment Calculator?

Compound interest is often called the eighth wonder of the world, but it can be hard to visualise. This calculator turns abstract percentages into concrete dollar projections, showing you exactly how your money grows year by year. It helps you compare different contribution strategies, return rate assumptions, and time horizons so you can make more confident investment decisions.

Key Concepts

Compound Interest

Earning returns on your returns. The longer you invest, the more powerful this effect becomes. A 7% return over 30 years turns $10,000 into over $76,000.

Contribution Frequency

How often you add money. More frequent contributions get invested sooner and start compounding earlier, though the difference is modest compared to total amounts.

Compounding Frequency

How often interest is calculated and added to your balance. Monthly compounding produces slightly more than annual, but the return rate is the bigger driver.

Real vs Nominal Returns

Nominal returns are the headline number. Real (inflation-adjusted) returns show what your future balance is actually worth in today’s purchasing power.

Investment returns and tax

Capital gains on shares and property

When you sell an investment for more than you paid, the profit is a capital gain. Gains on assets held for over 12 months receive a 50% CGT discount. The net gain is added to your taxable income and taxed at your marginal rate.

Dividends and franking credits

Australian company dividends often come with franking credits reflecting tax already paid at the company level. These credits reduce the additional tax you owe on the dividend income, and can sometimes produce a refund.

This is a general projection tool

This calculator does not model tax, fees, or specific asset classes. For capital gains estimates, use our CGT Calculator. For superannuation-specific projections, use the Super Projection calculator.

Frequently Asked Questions

How does compound interest work?

Compound interest means you earn returns not just on your original investment, but also on the interest already earned. Over time this creates exponential growth — often called the “snowball effect.” The longer your money compounds, the larger the gap between your contributions and your final balance.

What is a realistic annual return rate?

The long-term average return of the Australian share market (ASX 200) is roughly 8–10% p.a. including dividends, or around 6–7% after inflation. Bond and cash returns are typically lower (3–5% nominal). A diversified portfolio often falls in the 6–8% range depending on asset allocation. Past returns do not guarantee future performance.

What is the difference between nominal and real returns?

Nominal returns are the raw percentage your investment grows each year. Real returns subtract the effect of inflation, showing what your money is actually worth in today’s purchasing power. For long-term projections (10+ years), real returns give a more honest picture of your future buying power.

Does compounding frequency matter much?

More frequent compounding (e.g., monthly vs annually) produces a slightly higher effective return, because interest earned earlier in the year starts compounding sooner. However, the difference is usually modest — the return rate and time horizon have a much bigger impact on your final balance.

How are investment returns taxed in Australia?

Capital gains on investments held for more than 12 months qualify for a 50% CGT discount. Dividend income is taxed at your marginal rate, but franking credits offset tax already paid by the company. Interest income (savings accounts, bonds) is fully taxable at your marginal rate. Use our CGT Calculator for detailed capital gains estimates.

Should I invest a lump sum or contribute regularly?

Historically, lump-sum investing outperforms dollar-cost averaging (regular contributions) about two-thirds of the time, because markets tend to rise over time. However, regular contributions smooth out volatility and are more practical for most people who earn income over time. This calculator lets you model both approaches.

Does this calculator account for fees?

No. Investment management fees, platform fees, and brokerage costs reduce your effective return rate. To approximate fees, subtract them from your expected return rate before entering it. For example, if you expect 7% returns and pay 0.5% in fees, enter 6.5%.

How does this relate to superannuation?

Superannuation is a tax-advantaged investment vehicle with specific rules around contributions and access. This general investment calculator projects returns outside of super. For super-specific projections including concessional caps and employer contributions, use our Super Projection calculator.

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