Free calculator
Compound Growth Calculator
Project an account forward with compounding returns and optional regular contributions. Useful for getting the mathematics of growth straight, and for seeing why the numbers in trading adverts do not survive contact with arithmetic.
Ending balance
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Enter your numbers to project.
- Total contributed
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- Growth from returns
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- Total return
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- Equivalent annual rate
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- Periods compounded
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Illustrative projection only. Real returns are irregular and are never guaranteed.
The formula
Ending balance = Start × (1 + rate)n
Where rate is the return per period as a decimal and n is the
number of periods. With regular contributions, each deposit compounds for however many
periods remain after it is made, which is why contributing early matters more than
contributing more.
Why the curve is deceptive
Compounding is genuinely powerful and it is also the most commonly abused idea in trading marketing. The abuse works because the arithmetic is correct while the assumption underneath it is not.
Enter 10% per month over three years and the calculator will faithfully tell you that $10,000 becomes roughly $3 million. The mathematics is right. What is wrong is the idea that anyone compounds 10% monthly for 36 consecutive months. If that were achievable, the compounding itself would move the market the trader was trading.
What drawdowns do to the curve
Compounding runs in both directions, and losses compound more efficiently than gains because they shrink the base that future returns are calculated on.
A trader who makes 8% a month for eleven months and loses 40% in the twelfth ends the year up about 42%. A trader who makes a steady 3% a month with no disaster month ends up about 43%, with a fraction of the stress and far more of the capital intact.
This is the practical argument for strict position sizing: the tail risk you avoid is worth more to the final balance than the extra return you give up.
Frequently asked questions
How does compounding work in trading?
Each period your gain is calculated on the new, larger balance. A 5% gain on $10,000 is $500. The next 5% is calculated on $10,500 and comes to $525. Over enough periods that small difference becomes the dominant factor in the final result.
Is a consistent monthly return realistic?
No, and that is the most important caveat attached to this calculator. Real trading returns arrive lumpily: winning months, losing months, and drawdowns in between. A smooth compounding curve is a planning tool for understanding the mathematics. It is not a forecast of what any account will do.
What return should I assume?
Be conservative. Professional fund managers who consistently achieve 15-20% a year are considered outstanding. A projection built on 10% a month is an arithmetic exercise and nothing more, since it implies turning $10,000 into over $3 million in three years, which does not happen.
Why does the curve bend upward so sharply?
Because the growth compounds. The absolute gain per period keeps rising as the balance rises, so the later periods contribute far more in dollar terms than the early ones ever did. It is also why a drawdown late in the curve costs so much more than the same percentage did early on.
How do losses affect compounding?
Disproportionately. A 50% loss requires a 100% gain to recover, and the lost compounding time is never recovered at all. Protecting capital during drawdowns matters more to the final figure than maximising returns during good periods.