Question 1

What does $500 grow to at 7% for 5 years?

Accepted Answer

$500 invested at 7% annual compound interest for 5 years grows to $701. Your original investment earns $201 in interest — a 40.3% total return and a 1.40× multiplier on your money.

Question 2

How long does it take to double money at 7%?

Accepted Answer

At 7% annual compound interest, your money doubles approximately every 10.3 years (the Rule of 72: 72 ÷ 7 = 10.3). Over 5 years, $500 has the potential to double 0.5 times.

Question 3

Is 7% a realistic return?

Accepted Answer

7% is a moderate return that aligns with long-term historical averages for diversified share portfolios. The ASX 200 has returned around 9–10% p.a. including dividends historically, so 7% is realistic over long periods after accounting for fees and portfolio mix.

Question 4

What's the effect of adding regular contributions?

Accepted Answer

These figures show a one-time lump sum of $500 with no additional contributions. Adding regular contributions compounds the growth dramatically. For example, adding $200/month to $500 at 7% for 5 years would result in a significantly larger final balance. Use the interactive calculator above to model your own contribution amount.

Question 5

How does inflation affect this result?

Accepted Answer

This calculator shows nominal returns — the dollar figures before adjusting for inflation. Australia's historical inflation rate is around 2–3% per year. To estimate real purchasing power, subtract the inflation rate from your return: at 7% return and 2.5% inflation, your real return is approximately 4.5% p.a. In real terms, $701 in 5 years would buy meaningfully less than it does today.

Year	Balance	Interest
Yr 1	$535	+$35
Yr 2	$572	+$37
Yr 3	$613	+$40
Yr 4	$655	+$43
Yr 5	$701	+$46

Rate	Final balance	Interest earned	Multiplier
4%	$608	$108	1.22×
5%	$638	$138	1.28×
6%	$669	$169	1.34×
7% ◀	$701	$201	1.40×
8%	$735	$235	1.47×
9%	$769	$269	1.54×
10%	$805	$305	1.61×

Year	Balance	Interest this year	Total interest	Growth
Year 1	$535	+$35	$35	1.07×
Year 2	$572	+$37	$72	1.14×
Year 3	$613	+$40	$113	1.23×
Year 4	$655	+$43	$155	1.31×
Year 5	$701	+$46	$201	1.40×

Year	Balance	Interest
Yr 1	$535	+$35
Yr 2	$572	+$37
Yr 3	$613	+$40
Yr 4	$655	+$43
Yr 5	$701	+$46

$500 at 7% for 5 Years

How $500 grows at 7%

Year-by-year projection

Growth chart

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