How does this calculator work?
Each month, interest = balance × (annual rate ÷ 12) is added, then contributions are deposited. For yearly deposits, contributions are added only in the first month of each year. Tax is applied as your rate × cumulative returns, and inflation is discounted by dividing by (1 + inflation/12) each month. Changing any input recalculates instantly.
What is the difference between compound and simple interest?
Simple interest accrues only on principal; compound interest adds interest to principal so it earns more interest on top. On ₩100M at 5% over 30 years, simple gives ₩100M×(1+0.05×30)=₩250M, while compound gives ₩100M×1.05^30≈₩432M — a ₩182M gap. The gap grows exponentially with time.
How different are monthly vs yearly compounding?
More frequent compounding helps. At the same 5% annual rate, yearly reinvests once a year while monthly reinvests 12 times, raising the effective rate slightly (5% monthly ≈ 5.12% effective). But term and rate matter far more than frequency. This calculator uses monthly compounding.
What is the Rule of 72?
A quick estimate: years to double ≈ 72 ÷ annual rate (%). At 7% it takes about 10.3 years, at 6% about 12 years, at 4% about 18 years. You can also invert it — to double within 10 years you need about 7.2%. It works best for a one-time lump sum rather than ongoing deposits; use this calculator for the exact figure.
Is the Korean interest tax rate of 15.4% correct?
Deposit and savings interest is generally withheld at 14% income tax + 1.4% local tax = 15.4%. Tax-exempt savings, ISA interest within limits, foreign ETF capital gains (22%), and US ETF distribution withholding (15%) differ — enter the rate that matches your product.
What if I save ₩1M per month for 30 years with compounding?
At a 7% annual return (close to the long-term S&P 500 average), you'd accumulate about ₩1.22B (pre-tax, before inflation). At a 4% Korean savings rate, about ₩700M. Since principal is ₩360M (₩1M × 360 months), roughly ₩860M of the 7% result is pure compound growth. The same contribution nearly doubles depending on the product — add a 15.4% tax rate and expected inflation here to also see after-tax real value.
How is after-tax return calculated?
This calculator applies your tax rate only to cumulative 'profit' (balance − principal), then subtracts it from the balance for the after-tax amount; principal is never taxed. Enter 15.4% for a regular account and 9.9% for ISA to see how the tax gap widens over a long horizon.
How do I maximize compounding with a Korean ISA account?
ISA gives ₩2M (general) or ₩4M (basic-income) tax-free, with 9.9% separate taxation on the excess — vs. 15.4% in regular accounts. Over 30 years the difference compounds significantly. Set the tax rate to 9.9% or 0% to compare. ISA has a 3-year minimum holding period and a ₩20M annual / ₩100M total contribution cap.
Are 7–10% annual returns realistic for stock ETFs?
The S&P 500 averaged about 10% annually (≈7% real, inflation-adjusted) from 1928–2025. Short-term volatility is high and future returns aren't guaranteed. KOSPI tends to be more volatile, averaging 5–7%. We recommend a conservative scenario (5–7%) plus an optimistic one (8–10%) to see a realistic range.
How are variable yearly returns reflected?
This calculator assumes a fixed rate. Real markets fluctuate, so it's safer to run conservative (5%), base (7%), and optimistic (9%) scenarios separately as a range. The 'sequence of returns' risk near retirement — a big loss just before you retire — is handled in the FIRE calculator instead.