Compound Interest Calculator
See exactly how your savings or investments grow over time with the power of compounding. Add regular contributions and choose your compounding frequency for a realistic projection.
Your numbers
How the compound interest calculator works
Enter your starting balance, how much you plan to add regularly, the interest or return rate you expect, how often the interest compounds, and how many years you want to project. The calculator updates your results instantly — no need to click calculate.
The result shows your ending balance split into three parts: your original deposit, the total of your regular contributions, and the total interest earned. This breakdown helps you understand how much of your final balance is from effort (saving) and how much is from compounding (time and rate).
The formula behind the calculation
The standard compound interest formula is:
Where P is the principal (starting amount), r is the annual interest rate as a decimal, n is how many times per year the interest compounds, t is the number of years, and PMTis your periodic contribution amount. If you're making no contributions, the PMT term drops out and you're left with the classic single-deposit formula.
Worked example
Say you start with £5,000, contribute £150 per month, and earn a 6% annual return compounded monthly over 20 years. Here is what happens:
| Component | Amount |
|---|---|
| Starting deposit | £5,000 |
| Monthly contributions × 240 months | £36,000 |
| Total contributed | £41,000 |
| Interest earned through compounding | £35,821 |
| Final balance after 20 years | £76,821 |
Notice that over £35,000 of the final balance came purely from compounding — not from any extra effort on your part. That is almost as much as all your contributions combined. By year 30 the effect is even more dramatic.
Why compounding frequency matters
Compounding more frequently increases your return slightly, because interest is added to your principal more often — meaning each subsequent interest calculation works on a slightly higher base. In practice the difference between monthly and daily compounding is small, but annual versus monthly compounding can make a meaningful difference over long periods.
For most savings accounts and investment projections, monthly compounding is the most realistic default. Some investment platforms compound annually.
Tips to maximise compound growth
- Start early. The most valuable resource in compounding is time. Starting at 25 instead of 35 can more than double your retirement balance.
- Contribute consistently. Regular contributions build wealth more reliably than trying to invest large lump sums at the right moment.
- Reinvest your returns. In investment accounts, choose to reinvest dividends rather than taking them as cash. This is compounding in action.
- Minimise fees. A 1% annual fee might seem small, but over 30 years it can reduce your final balance by 25% or more.
- Protect your rate. Avoid withdrawing early. Breaking compound growth resets the exponential curve.
Frequently Asked Questions
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