What is compound interest?
Compound interest is "interest on interest": each month, the return is calculated on the previous month's balance, which already includes the interest earned so far. That is why money grows faster and faster over time, unlike simple interest, which is always calculated on the initial amount.
Compound interest formula
For a single deposit, the amount after n months is:
A = P × (1 + i)n
where P is the initial principal and i is the monthly rate. With monthly contributions C made at the end of each month, add the future value of the contributions:
A = P × (1 + i)n + C × [(1 + i)n − 1] ÷ i
An annual rate is converted to the equivalent monthly rate: i = (1 + annual rate)1/12 − 1. So 12% per year is about 0.9489% per month, not 1%.
Example
Investing 1,000.00 and contributing 100.00 per month at 1% per month for 12 months ends with 2,395.08. Of that total, 2,200.00 came from your own pocket and 195.08 is interest.
How to use the calculator
- Simulate an investment: enter the initial amount, the monthly contribution, the rate and the period. Optionally, add monthly withdrawals from a given month, income tax and inflation.
- Contribution for a final amount: enter how much you want at the end of the period and find out how much to invest each month.
- Contribution for a monthly income: enter the income you want to receive from interest alone. The calculator shows the wealth you need and the monthly contribution to get there.
The result includes a summary, charts and the month-by-month table, which you can download as CSV. The "Copy link" button creates an address that reopens the same simulation.
How income tax is estimated
You can choose no tax, a flat rate on the gains, or the Brazilian regressive table used for taxable fixed income (CDBs, Brazilian treasury bonds), where the rate on the gains falls with the holding period:
| Holding period | Tax rate |
|---|---|
| Up to 180 days | 22.5% |
| 181 to 360 days | 20% |
| 361 to 720 days | 17.5% |
| Over 720 days | 15% |
The calculator treats each contribution as a separate investment with its own holding period, counting 30 days per month. Withdrawals redeem the oldest contributions first and deduct the tax, so you receive exactly the amount entered. At the end of the period, a full redemption is simulated. IOF, come-cotas and product-specific rules are not considered.
Frequently asked questions
What is the difference between simple and compound interest?
With simple interest, each month's return is calculated on the initial amount. With compound interest, it is calculated on the accumulated balance, which includes past interest. Over long periods, the difference becomes huge.
How much do I need to live off my investments?
To live on interest alone without spending the principal, your wealth must equal the desired income divided by the monthly rate. For example, receiving 5,000.00 per month at 0.5% per month requires 1,000,000.00. Use the "Contribution for a monthly income" mode to find the contribution that gets you there.
What does "in today's money" mean?
It is the final amount discounted by the inflation you entered, that is, the purchasing power it would have today. It helps compare amounts that are far apart in time.
Is my data saved?
No. The calculation runs entirely in your browser and nothing you type is sent to the server. The simulation link keeps the values in the address itself, after the # sign, a part that browsers don't send to servers.
This calculator provides educational simulations and is not investment advice. Past returns do not guarantee future returns.