In short: Compound growth with regular contributions works by adding fresh capital each month while earlier investments and reinvested dividends generate subsequent market returns. Over decades, the cumulative earnings from past growth begin to exceed the total cash contributed. Fund costs continuously deduct from this growth, making low ongoing charges essential.
What does compounding mean when you invest?
Compounding is the everyday name for compound return. With shares, it is about return, which means price changes and reinvested dividends. It is not fixed bank interest. Real returns go up and down and can be negative in a given year. Compounding simply means you make a return on your earlier return.
What does investing €100 a month grow to?
This is what the calculation shows for regular investing of €100 at the end of every month, starting at €0. The calculation uses a constant 6% a year before costs. 6% is an illustrative assumption, not a forecast. 6% a year is applied as 0.5% per month, which compounds to about 6.17% a year. Real returns go up and down and can be negative. The ongoing costs (TER) are 0.14% a year. There are no taxes, transaction costs, or inflation included in this example.
| Horizon | Deposited | Without costs | After 0.14% costs | Costs in total |
|---|---|---|---|---|
| 10 years | €12,000 | €16,388 | €16,264 | €124 |
| 20 years | €24,000 | €46,204 | €45,445 | €759 |
| 30 years | €36,000 | €100,452 | €97,803 | €2,649 |
| 40 years | €48,000 | €199,149 | €191,745 | €7,405 |
Investing involves risk of loss. The figures presented by this calculator are for illustrative purposes only and do not constitute financial advice. Past performance does not guarantee future results.
Why does compound growth seem slow in the early years?
In year 1, you deposit €1,200. Without costs, the balance is about €1,234, so you have roughly €34 of return in the first year. After 10 years, most of the balance is still your own money. After 40 years, you have deposited €48,000, but the balance is €191,745 after costs. At that point, about three quarters is return. Time is highly effective over a long investment horizon. Doubling the time from 20 to 40 years doubles the deposits from €24,000 to €48,000. However, the net balance becomes about 4.2 times as large, growing from €45,445 to €191,745.
How do investment costs compound over time?
Whatever goes to costs each year stops growing with the rest, an effect called fee erosion. In our example, the total costs over 40 years are €7,405. This is 4.9% of the gross gain (€151,149, which is €199,149 minus €48,000). What matters most is what you keep. If you invest €100 a month for 30 years at 6% before costs, at 0.07% costs you keep €99,117. At 1.50% costs, you keep only €75,939. The difference between gross and net is what you keep.
How can you test the calculation yourself?
You can calculate this by finding the monthly rate. That is the yearly return minus the ongoing costs, divided by 12. In this example: (6% – 0.14%) ÷ 12 = 0.48833% a month. Each month, you multiply the balance by 1 plus the monthly rate, and then add €100. In a spreadsheet, use the FV (future value) function with the monthly rate and the number of months. Without costs, the monthly rate is 0.5%.
FV = PMT × ((1 + i)^n − 1) ÷ i
To estimate how long money takes to double at a steady rate, see the rule of 72.
What does this compounding calculation not show?
This calculation assumes a constant return. It does not show market crashes, like the dot-com bubble, and it excludes transaction costs and tax. It also excludes inflation unless you choose an inflation rate in the calculator. Read more about the assumptions and limits of this calculation.
To see compounding in motion, follow Every drop counts: 30 years of investing, illustrated.
Sources
- Figures computed with the site’s own calculation engine, explained on How it works.
- Ongoing costs of 0.14%: Vanguard FTSE All-World UCITS ETF, key information document, checked 19 October 2026.
This is general information, not tax or investment advice. For your own situation, consult a qualified tax adviser, a financial adviser licensed by the AFM (the Dutch financial markets authority) or the Belastingdienst.
Further reading:
Source of the figures: the ETF calculator's own calculation engine, under the assumptions in the text. How the calculator works