Compound interest & savings
This calculator works out the future value of your savings with compound interest. Enter an initial deposit, a regular monthly contribution, the annual interest rate and the saving period, and you instantly see how much you will accumulate, how much you paid in, and the net interest earned. Ideal for planning a reserve, saving for children, or comparing the effect of compounding.
How compound interest is calculated
Compound interest means interest is credited not only to your original deposit but also to previously credited interest – your money grows as „interest on interest“. The calculator uses monthly compounding: it divides the annual rate by twelve and multiplies the period in years by twelve to get the number of months. The result combines two parts – growth of the one-off initial deposit and growth of the stream of regular monthly contributions (a savings annuity).
FV = P × (1 + i)n + c × ((1 + i)n − 1) / i
where FV is the future value, P the initial deposit, c the monthly contribution, i the monthly rate (annual rate / 12 / 100) and n the number of months (years × 12).
- Convert the annual rate to monthly: i = annual % / 12 / 100.
- Compute the number of months: n = years × 12.
- Grow the initial deposit: P × (1 + i)n.
- Add the grown stream of monthly contributions.
- Subtract the money paid in (P + c × n) to get the net interest earned.
Worked example step by step
Take an initial deposit of 50,000 CZK, a monthly contribution of 2,000 CZK, an annual rate of 5% and a saving period of 10 years. The monthly rate is i = 5 / 12 / 100 = 0.0041667 and the number of months n = 120. The compounding factor (1 + i)120 is roughly 1.647009 and the annuity factor ((1 + i)120 − 1) / i is roughly 155.2823.
| Step | Item | Calculation | Amount |
|---|---|---|---|
| 1 | Monthly rate | 5 / 12 / 100 | 0.0041667 |
| 2 | Number of months | 10 × 12 | 120 |
| 3 | Grown initial deposit | 50,000 × 1.647009 | 82,350 CZK |
| 4 | Grown monthly contributions | 2,000 × 155.2823 | 310,565 CZK |
| 5 | Total paid in | 50,000 + 2,000 × 120 | 290,000 CZK |
| 6 | Interest earned | 392,915 − 290,000 | 102,915 CZK |
| 7 | Future value | 82,350 + 310,565 | 392,915 CZK |
After ten years you accumulate roughly 392,915 CZK. Of that, 290,000 CZK are your own deposits and 102,915 CZK is the net gain from compound interest.
What affects the result
- Interest rate – even a small difference in percent makes a large difference in the final amount over a long horizon.
- Saving period – the longer the money works, the stronger the interest-on-interest effect.
- Monthly contribution – over long horizons regular contributions form most of the accumulated amount.
- Initial deposit – the starting principal earns interest the whole time, so it carries high weight.
- Compounding frequency – the calculator uses monthly compounding, which is standard for savings products.
When compound interest helps and what to watch out for
The calculator is for indicative planning of savings and investments at a constant rate. It assumes the interest rate and the contribution stay the same the whole time, which real products may not honour – savings-account rates change and investment returns fluctuate. The calculation ignores tax on the gains (15% on interest), inflation, fees and reinvestment risk. Because of inflation, the real purchasing power of the accumulated amount will be lower. Treat the result as a model estimate, not a guaranteed return.
⚠️ Indicative calculation, rates current for 2026. Not a substitute for an accountant or tax advisor — verify important decisions with the Czech Financial Administration.
FAQ
How much will I save from 50,000 CZK plus 2,000 CZK a month at 5% over 10 years?
About 392,915 CZK. Of that, 290,000 CZK are your deposits and 102,915 CZK is the net interest earned through compounding. This is a model calculation excluding tax and inflation.
What is compound interest in simple terms?
It is crediting interest not only to your original deposit but also to previously credited interest. Money grows as „interest on interest“ and the growth accelerates over time, because an ever-larger amount earns interest.
What is the difference between simple and compound interest?
Simple interest always calculates interest from the original principal only. Compound interest also adds interest on accrued interest, so over a longer horizon it yields significantly more than simple interest.
Does the calculation include tax on gains?
No. The calculator shows the gross return. In the Czech Republic interest income is subject to 15% withholding tax; investments may follow other rules or exemptions (e.g. a holding-period test). The net after-tax amount will be lower.
Does the calculator account for inflation?
No, it works with nominal values. Because of inflation, the real purchasing power of the accumulated amount will be lower. For a real return, subtract the expected inflation rate from the interest rate as a rough guide.
How does the result change if I raise my monthly contribution?
The amount paid in rises linearly and the grown annuity increases as well. Over long horizons monthly contributions form most of the final amount, so increasing them strongly affects the result.
How often is interest credited?
The calculator uses monthly compounding – it divides the annual rate by twelve and credits interest each month. This matches common practice for savings accounts and regular investing.
Does the calculation also apply to funds or ETFs?
You can use it as a simplified model with a chosen average annual return. Actual investment returns fluctuate, are not guaranteed and can even be negative, so the result is only indicative.
Sources & legislation
📅 Last updated: 11 July 2026