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Compound Interest Calculator

See how your money grows over time with compound interest. Add monthly contributions, compare scenarios, and visualise your wealth growth.

Investment Details

£1,000
£0£500,000
£
£100
£0£5,000
£
7%
0.5%25%
% per year
10 years
1 year50 years
years
0%
% per year
UK average inflation is ~2-3%. Set to 0 to ignore.

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Help others understand the power of compound interest!

How to Use This Calculator

1
Enter Initial Deposit Use the slider or type the amount you're starting with. This is your principal — the money you invest today.
2
Set Monthly Contribution Enter how much you'll add each month. Even small regular contributions make a huge difference over time.
3
Choose Interest Rate Set your expected annual return. Savings accounts: 3-5%. Stock market average: 7-10%. Bonds: 3-5%.
4
Set Time Period Choose how many years you plan to invest. The longer the period, the more powerful compound interest becomes.
5
Select Compounding Frequency Choose how often interest compounds — daily, monthly, quarterly, semi-annual, or annually. Monthly is most common.
6
Add Inflation (Optional) Enter an inflation rate to see your future value in today's purchasing power. UK average is 2-3%.
7
Click Calculate View your results with charts, year-by-year table, and breakdown of principal vs interest earned.
8
Compare Scenarios Change values and calculate again. Each calculation is saved for side-by-side comparison. Export results as PDF.

Smart Investing Tips

Start EarlyTime is the most powerful factor. Starting 10 years earlier can double your returns.
Be ConsistentRegular monthly contributions matter more than timing the market.
Reinvest ReturnsAlways reinvest dividends and interest to maximise compound growth.
DiversifySpread investments across different assets to reduce risk.
Minimise FeesEven 1% in fees can cost tens of thousands over decades.
Use Tax SheltersISAs and pensions protect your returns from tax.

Understanding Compound Interest

What is Compound Interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (calculated only on the principal), compound interest grows exponentially over time. Albert Einstein reportedly called it "the eighth wonder of the world."

The Compound Interest Formula

A = P(1 + r/n)^(nt) where A = final amount, P = principal, r = annual interest rate, n = compounding frequency per year, and t = time in years. With regular contributions, the formula becomes more complex but our calculator handles it all automatically.

Compounding Frequency Matters

The more frequently interest compounds, the more you earn. Daily compounding earns slightly more than monthly, which earns more than annually. However, the difference between daily and monthly is usually small. The biggest jump is from annual to monthly compounding.

The Rule of 72

A quick way to estimate how long it takes to double your money: divide 72 by your interest rate. At 7% interest, your money doubles in approximately 72 ÷ 7 = 10.3 years. At 10%, it doubles in about 7.2 years.

Frequently Asked Questions

What interest rate should I use?

For savings accounts, use 3-5%. For stock market investments (S&P 500 average), use 7-10%. For bonds, use 3-5%. For property, use 5-8%. These are historical averages — actual returns will vary year to year.

Should I account for inflation?

Yes, if you want to understand the real purchasing power of your future money. UK inflation averages 2-3% per year. A future value of £100,000 with 3% inflation is worth about £74,000 in today's money after 10 years.

How often should I compound?

Most savings accounts compound daily or monthly. Investment returns are typically calculated monthly or quarterly. The more frequent the compounding, the more you earn — but the difference between daily and monthly is usually less than 0.1% per year.

Is this calculator accurate?

Yes! This calculator uses the standard compound interest formula with contributions. Results assume a constant interest rate and regular contributions. Real-world returns will fluctuate, but this gives you an excellent projection for planning purposes.

What's the difference between compound and simple interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all accumulated interest. Over long periods, compound interest generates dramatically more wealth. For example, £10,000 at 7% for 30 years: simple interest = £31,000, compound interest = £76,123.