%
Final value
?
Total invested
?
Interest earned
?
Year by year
The details that change the answer
- Compounding frequency matters. The same nominal 5% compounded monthly beats 5% compounded yearly, because each month’s interest starts earning immediately. The difference grows with the term.
- Contributions are added at the end of each period. That is the conservative convention. Adding them at the start would give a slightly higher figure, and calculators that do so without saying it flatter the result.
- Interest earned is shown separately from what you put in. Over a long term the interest can exceed the contributions, and seeing the two apart is the point of the exercise.
- The table shows the crossover. You can read off the year when accumulated interest overtakes accumulated contributions.
- No inflation, tax or fees. This is gross growth at a fixed rate. Real returns after inflation and charges are lower, sometimes markedly.
The equivalent in Excel
Without contributions it is =amount*(1+rate/n)^(n*years). With them, =FV(rate/n, n*years, -contribution, -amount) does the whole thing, where n is the number of compounding periods a year.