How it is calculated
The balance of the initial amount after t years:
where r is the annual return and n the compounding periods per year. Monthly deposits are added at the end of each month and grow at the same rate.
Rule of 72: divide 72 by the return to estimate how many years it takes to double. At 8% money doubles in about 9 years.
Worked example
10,000 initial plus 500 a month at 7% compounded monthly for 20 years: you deposit 130,000 in total and end with about 300,900 — the growth exceeds what you put in.
Frequently asked questions
Simple vs compound interest?
Simple interest is on the original amount only; compound is on the principal plus accumulated earnings, so growth accelerates over time.
Is compound interest permissible in Islam?
Interest (riba) on loans and deposits is prohibited by the majority of scholars. The same formula, however, describes any reinvested investment growth, such as Shariah-compliant funds or stocks.
Is the return guaranteed?
No. Stock and fund returns fluctuate; the calculator assumes a constant average for illustration.
Does it account for inflation?
Subtract expected inflation from the return to estimate your future money in today’s terms.