Project the growth of a peso investment with regular contributions.
Future value
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Total contributed
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Interest earned
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Worked example
Start with 100,000 pesos and add 5,000 a month for 10 years, earning 8% a year compounded monthly. The
starting 100,000 grows on its own to about 221,964 over the decade. The monthly contributions, 60,000 a
year for a total of 600,000 deposited, grow to about 914,730 because each deposit also earns interest for
the years that follow it. Added together the future value is roughly 1,136,694. Of that, 700,000 is money
you put in, the 100,000 start plus 600,000 of contributions, and about 436,694 is interest the account
earned. More than a third of the final balance is growth you never deposited, and stretching the same plan
to 20 years would let compounding do far more of the work.
Item
Amount (PHP)
Starting principal
₱100,000
Contributions over 10 years
₱600,000
Interest earned
₱436,694
Future value
₱1,136,694
How it is calculated
Compound interest pays a return on both your principal and the interest already credited, so the balance
grows faster the longer it runs. The calculator splits the math in two. The starting principal grows by the
compound-growth factor, one plus the periodic rate raised to the number of periods, where the periodic rate
is the annual rate divided by the compounding frequency. The regular contributions use the future-value-of-
an-annuity formula, which sums each deposit plus the growth it earns over its remaining time. The two parts
are added for the future value. Total contributed is the principal plus every deposit, and interest earned
is the future value less that total. Compounding more often, monthly rather than yearly, lifts the result
slightly at the same nominal rate. This is a pure time-value projection: it assumes a steady return and
does not deduct the 20% final tax that applies to peso bank-deposit interest, so a taxable account would
end a little lower.
Frequently asked questions
How does compound interest grow my savings?
Compound interest pays you interest on both your principal and the interest already earned, so growth speeds up over time. The more often interest compounds, monthly rather than yearly for example, the slightly higher the result at the same nominal rate. Adding regular contributions accelerates it further. This tool shows pure time-value growth and does not deduct any final tax on the interest.
Does the BIR tax the interest I earn on peso deposits in the Philippines?
Yes. The Bureau of Internal Revenue imposes a 20% final withholding tax on interest income from peso bank deposits and deposit substitutes held by individual residents. The bank deducts this automatically before crediting interest to the account. This calculator shows the gross pre-tax future value, so a taxable savings account will end up slightly lower than the figure shown once the 20% final tax is applied each period.
Which Philippine savings vehicles benefit most from compounding?
Time deposits, money market funds, and UITF bond funds all allow interest to roll over and compound. Government retail treasury bonds (RTBs) pay fixed coupons that can be reinvested. The Pag-IBIG MP2 savings program declares annual dividends that are added to the balance tax-free for individual members, making it one of the few peso instruments where the full gross return compounds without withholding. The longer the holding period, the more pronounced the difference between frequent and infrequent compounding.
How does Philippine price inflation affect the real return shown here?
This calculator computes nominal future value using the rate you enter. If consumer price inflation runs at, say, 4% a year and the deposit rate is 6%, the real purchasing-power return is closer to 2%. Bangko Sentral ng Pilipinas targets headline inflation within a band and publishes monthly CPI data that savers can use to estimate real returns. To see the inflation-adjusted result, enter the real interest rate (nominal rate minus expected inflation) instead of the headline deposit rate.