Calculator
Compound Interest Calculator
See how your investments could grow over time. Add regular contributions, choose your compounding frequency, and watch the magic of compounding play out year by year.
Your investment
Estimates only. Real-world returns vary; this calculator does not account for fees, tax, or inflation.
Contributions vs interest
Year-by-year growth
How compound interest works
Compound interest is interest paid on interest. Each period, the gains earned in previous periods become part of the balance that earns the next round of interest, so growth accelerates over time. The longer the horizon, the more dramatic the effect — which is why starting early matters far more than starting big.
The formula
For a single lump sum: A = P × (1 + r/n)^(n × t)
- A — final amount
- P — principal (starting balance)
- r — annual interest rate (as a decimal)
- n — compounding periods per year
- t — number of years
With regular monthly contributions, each contribution gets its own future-value calculation based on how long it has left to compound. The calculator handles this automatically.
Worked example
Scenario: Start with £10,000, contribute £300/month, 7% annual return, 25 years.
Total contributed: £10,000 + (£300 × 12 × 25) = £100,000
Final balance: ~£298,000
Interest earned: ~£198,000 — almost double what you put in.
Now drop the time horizon to 15 years instead of 25 and the final balance falls to about £124,000. Time is the single biggest lever.
Frequently asked questions
What is compound interest?
Compound interest is interest earned not just on your initial principal, but also on the interest already accumulated. This compounding effect makes savings grow exponentially over time, which is why long horizons matter so much for retirement planning.
What is the formula for compound interest?
The compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. With regular contributions, you sum the future value of each contribution as it compounds.
How often should compounding happen?
More frequent compounding gives slightly more growth — daily beats monthly beats annual — but the difference is small at typical rates. UK savings accounts often compound annually or monthly; index funds effectively compound continuously through reinvested dividends and price growth.
How important are regular contributions?
Often more important than the starting balance. Adding £200/month for 30 years at 7% turns £72,000 of contributions into about £244,000 — over three times the input. Time and consistency beat lump-sum heroics for most savers.
What rate of return is realistic?
For long-term equity investing, 5-7% real (after inflation) is a common planning assumption based on historical returns. Cash savings rarely beat inflation; bonds sit between the two. Past performance doesn't guarantee future results, so it's wise to stress-test plans at lower rates.
Does this account for tax?
No — figures are gross of tax. In the UK, ISAs and pensions shelter growth from tax; in the US, 401(k)s, IRAs and Roth accounts do similarly. Outside those wrappers, dividends and capital gains are taxed and will reduce real growth.