Compound Interest Calculator

The future value is what your savings could grow to, combining your deposits with interest earned on both the balance and previous interest — the compounding effect. The gap between the future value and everything you paid in is the interest your money earned. Real returns vary yearly; this assumes a constant rate and ignores tax, fees and inflation.

Why this one is different

Regular contributions are modelled, not just a lump sum, and three complete growth plans are worked out on a linked page. A companion simulator draws the same maths as a live curve against a five-years-earlier overlay. The page also states plainly what the projection ignores: inflation, tax and fees, all of which compound too.

The eighth wonder

The snowball that made Warren Buffett rich

Compound interest is often called the most powerful force in finance — money earning money that then earns more money. Start early and time does the heavy lifting; wait ten years and you’re fighting uphill for the rest of your life.

The lesson from every wealth study is the same: consistent contributions and time beat clever timing. Small monthly amounts, left alone, quietly become large ones. To model that as a real plan — a fixed sum every month, rising each year, with charges and inflation taken out — use the SIP calculator or the step-up SIP calculator.

How it works

Compound interest earns interest on both your original money and the interest already added. Over long periods this snowball effect dominates — which is why starting early and contributing regularly matters far more than chasing a slightly higher rate. This calculator compounds monthly and adds each contribution at the end of the month.

Formula

FV = P(1+i)ᴺ + C · ((1+i)ᴺ − 1) ÷ i

P = initial amount, C = monthly contribution, i = monthly rate (annual ÷ 12), N = number of months.

Example calculation

£10,000 plus £100/month at 5% for 10 years:

Total contributed = £22,000
Future value ≈ £32,000
Interest earned ≈ £10,000

Frequently asked questions

How often is interest compounded here?＋

Monthly. Real accounts may compound daily, monthly or annually — more frequent compounding gives a marginally higher result at the same headline rate.

Does it account for inflation or tax?＋

No. Results are nominal. To see purchasing power, subtract expected inflation from your rate, and remember returns may be taxable outside tax-free accounts.

What is the rule of 72?＋

Divide seventy-two by the annual percentage rate and you get roughly the number of years for money to double. At six per cent that is twelve years; at nine per cent, eight. It is most accurate between about four and twelve per cent, and it works on costs too — at three per cent inflation, prices double in twenty-four years.

Does compounding more often make a big difference?＋

Less than most people expect, and the benefit saturates quickly. At five per cent a year, annual compounding returns five per cent, monthly about 5.12 per cent and daily about 5.13 per cent. The effective annual rate is the figure to compare between accounts, because it already accounts for frequency.

How much do fees cost over the long run?＋

Far more than the headline percentage. An annual charge of one per cent against a six per cent return does not remove a sixth of your outcome — over thirty years it removes closer to a quarter of the final balance, because every pound taken in fees is also a pound that never compounds again.