Compound Interest Calculator

This compound interest calculator helps you estimate how much an investment could grow when interest is added back into the balance and earns more interest over time.

Enter your investment details, including your initial investment, annual interest rate, time period, and how often interest compounds. The calculator then shows your future balance, total interest earned, and year-by-year growth.

Compound interest works best when money is left to grow for a long time. Even small changes in rate, time, or compounding frequency can make a noticeable difference to your final balance.

Suppose you invest £5,000 at an annual return of 6% and leave it for 20 years. With annual compounding and no further deposits, the balance grows to about £16,036.

The striking part is that the growth accelerates. In the first year, 6% earns £300. In year 20, the same 6% applies to a much larger balance, so the interest added that year is far higher. That is the compounding effect: previous growth starts creating more growth.

Regular contributions can be even more powerful. Adding £100 per month to the same investment would turn a simple lump-sum calculation into a long-term savings plan, because each contribution gets its own time to compound.

Compound interest rewards time because the biggest gains often arrive late in the journey. A 30-year calculation is not simply a 10-year calculation repeated three times. The later years start from a larger balance, so each percentage point is worth more in pounds.

This is why starting earlier can beat contributing more later. A smaller amount invested for longer may grow more than a larger amount invested for a shorter period. The calculator is useful for testing that trade-off before setting a savings or investment target.

The first mistake is assuming a return is guaranteed. Bank savings rates may be predictable for a period, but investment returns move up and down. A 6% example is an assumption, not a promise.

The second mistake is ignoring inflation, fees, and tax. A balance can grow in nominal terms while buying power grows more slowly. Platform fees, fund charges, account fees, and tax can all reduce the effective return.

The third mistake is withdrawing too early. Taking money out interrupts the compounding chain because the withdrawn amount no longer earns future interest. That does not mean withdrawals are always wrong, but they should be part of the plan.