ETF savings plan calculator: how compound interest grows your money

What compound interest means

With compound interest, it is not only your contributions that grow but also the returns you have already earned. With ETFs these are price gains and dividends rather than interest in the strict sense, but the principle is the same: if 1,000 € grows by 7 %, you have 1,070 €. Next year, 1,070 € grows, not 1,000 €.

At first the effect looks small. Over many years, though, it becomes the largest part of your wealth: at some point your returns contribute more than your own deposits.

How a savings plan is calculated

In a savings plan, new money comes in every month. A common way to calculate it: the contribution is invested at the start of the month, then the whole portfolio grows by one twelfth of the annual return. At 7 % a year, that is about 0.58 % a month. Repeat this for every month of the plan.

By hand that is tedious; a compound interest calculator does it in seconds. Owlvest calculates exactly this way, month by month, and shows your contributions and returns separately in a chart and a year-by-year table.

Worked example: what 100 € a month can grow to

Assumption: you start from zero and invest 100 € a month. The table uses an assumed average return of 5 % or 7 % a year, compounded monthly, before fees, taxes and inflation. These are assumptions, not forecasts. Values are rounded to whole euros; the math works the same in dollars.

• After 30 years at 7 %, only 36,000 € of the 122,709 € comes from your contributions; about 86,709 € is returns.
• Two percentage points of return make a difference of more than 110,000 € after 40 years, which is why a realistic assumption matters so much.

Time is the biggest lever

Compare 20 and 30 years at 7 %: with 100 € a month you reach about 52,397 € after 20 years and about 122,709 € after 30 years. The extra ten years cost you 12,000 € in contributions but add more than 70,000 €.

If you start ten years later, doubling your contribution is not enough to catch up: 200 € a month at 7 % for 20 years grows to about 104,793 €, still less than 100 € a month over 30 years. Starting early, even with small amounts, pays off.

Fees: the TER adds up

Every ETF has ongoing costs, stated as the TER (total expense ratio) per year. They are taken directly from the fund's assets and reduce your return every year. Over decades this adds up noticeably, because fees compound too.

Same example, 100 € a month for 30 years at an assumed 7 % return before fees:

Inflation: what your money is worth later

122,709 € in 30 years is not the same as 122,709 € today. With an assumed inflation rate of 2 % a year, the final value from the 7 % example equals only about 67,744 € in today's purchasing power. At a 5 % return it would be about 46,138 €.

That does not mean saving is pointless; money left in a checking account loses value to inflation just the same. But it helps you set realistic goals. That is why Owlvest also shows your result in today's money.

Why your real result will differ

A calculator with a fixed return pretends your ETF grows evenly every year. In reality, stock prices swing a lot: years with gains of more than 20 % can be followed by years with significant losses. The 7 % in the example is an assumed average, not a promise.

For a savings plan, the order of returns matters too. A crash shortly before the end hits a large portfolio harder than a crash in the early years, when you are still buying cheaply. So it makes sense to look at a range rather than a single number. Owlvest Pro simulates many possible market paths and shows a pessimistic, a middle and an optimistic outcome.

Don't forget taxes

The examples above are before taxes. How returns are taxed depends on your country. In Germany, for example, gains are subject to a flat withholding tax plus solidarity surcharge, reduced by a 30 % partial exemption for equity ETFs and an annual saver's allowance, and accumulating ETFs are also taxed a little every year through the Vorabpauschale, explained in our separate guide.

Your savings plan in Owlvest

To try your own numbers, enter your starting amount, monthly contribution, return and duration in Owlvest. You can include fees, inflation, a yearly increase in your contribution and one-off payments, save and compare scenarios, work out how much you need to save to reach a goal, and later plan your withdrawals. Everything is calculated on your device.

Note: this article is general information, not investment or tax advice.