What's the difference between simple and compound interest?
Simple interest is calculated only on the original amount each time, while compound interest/return is calculated on the original amount plus all previously accumulated earnings — i.e. "earnings on earnings." This difference becomes enormous the longer the investment period.
What realistic annual return rate should I use?
It varies by investment vehicle: bank savings accounts usually under 1-3%, index and equity funds globally have historically averaged around 7-10% annually over the long term (with large annual swings), and government sukuk/bonds are less volatile with lower returns. There's no guaranteed number — use the calculator with more than one scenario (optimistic and conservative).
What does the "Rule of 72" shown in the result mean?
A quick mathematical approximation to know how many years your amount needs to double: 72 ÷ annual return rate. For example, at an 8% annual return, your amount roughly doubles every 9 years (72÷8). This is a rough estimate, not a precise calculation, but a useful quick mental tool.
Does the calculation include inflation?
No, the calculator shows the nominal value of your savings without deducting the effect of inflation on purchasing power. If you want to estimate the real value, use an "inflation-adjusted" return rate (your expected return minus expected inflation) as the return rate input instead of the nominal rate.
Why does growth accelerate more in later years than earlier ones?
Because each compounding period adds a return on a larger balance than the previous period (the original amount plus all previously accumulated earnings), so growth is exponential, not linear — this is why the timeline table in the result shows the jump between year 8 and 10 is much larger than the jump between year 1 and 2, despite the equal duration.
Can I find out the monthly contribution needed to reach a target amount?
Yes, choose "I have a target amount" from the calculation method at the top of the form, and enter the amount you're aiming for, and you'll get the precise monthly contribution needed to achieve it within the same duration and expected return.
