Compound Interest Calculator
Project how your savings grow over time with compound interest. Use the reference rates below to model a regular savings account, time deposit, digital bank, Pag-IBIG MP2, or S&P 500 index investment.
Compound Interest Projector
Gross of tax. Reinvested earnings only.
Market Rate Reference (PH 2026)
Indicative annual yields. Click any rate above the calculator to apply it.
| Product | Est. Rate p.a. | Notes |
|---|---|---|
| Regular savings account | 0.25% | Big-bank passbook/ATM savings (BPI, BDO, Metrobank) |
| Time deposit (1-year) | 3.50% | Typical local-bank peso time deposit, gross of 20% final tax |
| Digital bank savings | 4.00% | CIMB, Maya, SeaBank, Tonik base/promo rates (PDIC-insured) |
| Pag-IBIG MP2 Savings | 6.75% | 5-year average of declared MP2 dividends (tax-free) |
| S&P 500 index (long-term) | 10.00% | ~30-year historical USD CAGR — not guaranteed, FX risk applies |
Frequently Asked Questions
What is compound interest?
Compound interest is the interest you earn on both your original principal and on the interest that has already been credited. Over long periods this 'interest on interest' effect grows your money much faster than simple interest.
How accurate are the reference rates?
The reference rates are indicative market estimates for the Philippines in 2026 based on published bank rate sheets, BSP statistics, Pag-IBIG MP2 historical dividends, and long-term S&P 500 returns. Actual yields vary by provider, promo period, and market conditions, and most rates (except MP2) are subject to 20% final withholding tax.
What's the difference between monthly and yearly compounding?
More frequent compounding gives a slightly higher effective yield because earnings are credited and reinvested sooner. Most Philippine savings products credit interest monthly or quarterly; MP2 and time deposits typically compound annually at maturity.
Does this calculator include taxes?
No. Results are shown gross of tax. In the Philippines, most interest income is subject to a 20% final withholding tax. Pag-IBIG MP2 dividends and qualifying long-term time deposits (5+ years) are tax-exempt.
How compounding works on Philippine savings and investments
Compound interest means your returns start earning returns. Put ₱10,000 in an account paying 6 percent and you have ₱10,600 after a year; in year two the 6 percent is charged on ₱10,600, not on your original ₱10,000. Stretched over ten or twenty years and combined with regular monthly contributions, that difference is what turns modest savings into a meaningful amount.
Compounding frequency matters less than people expect, and the contribution amount matters far more. Monthly versus annual compounding at the same rate changes the result by a fraction of a percent, while adding ₱2,000 a month instead of ₱1,000 roughly doubles the balance you end up with. Time is the other big lever: starting five years earlier usually beats trying to catch up with a higher-risk investment later.
For a Philippine reference point: regular savings accounts pay well under 1 percent, digital bank savings accounts run roughly 2 to 4 percent, Pag-IBIG MP2 has historically paid around 6 to 7 percent tax-free, time deposits and retail treasury bonds land in between, and long-run equity or index-fund returns are higher but not guaranteed in any single year.
- Interest on bank deposits in the Philippines is subject to a 20 percent final withholding tax; MP2 dividends are tax-free.
- Inflation quietly reduces real returns — if your account pays 4 percent and inflation runs 3 percent, your purchasing power grows by about 1 percent.
- Set your contribution as an automatic transfer on payday so compounding is never interrupted by a skipped month.
- Higher advertised rates usually carry higher risk or lock-in periods. Check whether the deposit is PDIC-insured before chasing yield.
Frequently asked questions
What interest rate should I assume for a Philippine savings plan?
Use 2 to 4 percent for a digital bank savings account, about 6 percent for Pag-IBIG MP2 based on its historical dividend, and 8 to 10 percent only for long-horizon equity or index investing where the return is not guaranteed. Running the calculator at a conservative and an optimistic rate gives you a realistic range.
Is monthly compounding much better than annual?
Only slightly. At the same nominal rate, monthly compounding adds a small fraction of a percent per year. Your contribution amount and how long you stay invested make a far bigger difference than compounding frequency.
Is compound interest taxed in the Philippines?
Interest earned on bank deposits and time deposits is subject to a 20 percent final withholding tax, deducted at source. Pag-IBIG MP2 dividends are tax-exempt, which is why its effective return often beats a bank rate that looks similar on paper.
How long before compounding really shows?
The effect is small in the first two or three years and becomes obvious somewhere between years seven and ten, when the interest earned in a single year starts to rival your annual contributions. That is why the most valuable move is simply starting now and not withdrawing.