Figures are illustrative only, ignore charges and tax, and are not a forecast or personal recommendation.
Compound interest is the effect of earning returns not just on the money you originally put in, but on the returns that money has already earned. Left alone for long enough, it turns modest, regular saving into a substantial sum — which is why it's often described as the most powerful force in personal finance. The calculator above lets you enter a starting amount, a monthly contribution, an assumed annual interest rate, and a number of years, then shows the future value, how much of that is your own money, and how much is interest earned on top.
How the calculation works
The tool compounds monthly: each month, interest is calculated on the current balance (starting amount plus contributions made so far), and that interest is added to the balance before the next month's interest is calculated. This is why the growth line on a compound interest chart curves upward rather than rising in a straight line — the interest itself starts earning interest. Over short periods the effect is small, but over two or three decades of consistent saving it accounts for a large share of the final total.
Worked example
Someone starting with £1,000, adding £200 a month, and earning 5% a year would, after 20 years, have paid in £49,000 of their own money but end up with a pot noticeably higher than that — the gap between the two figures is the interest earned. Try changing the interest rate by even a percentage point in the calculator above and notice how much the 20-year outcome shifts; small differences in assumed return compound into large differences over time, which is one reason fees matter so much to long-term outcomes.
What "interest rate" means here
This calculator treats the interest rate as a single, constant annual figure for simplicity. In the real world, if the money is held in a savings account the rate is usually set by the provider and can change; if it's invested in funds or shares, there is no guaranteed rate at all — the figure you enter is an assumption about average annual growth, and actual returns will vary year to year, sometimes losing money in poor years and gaining more in good ones. The calculator cannot know your personal tax position either, so if the growth happens outside a tax-efficient wrapper such as an ISA, some of it may be reduced by tax.
Compound interest vs compound growth
Strictly, "interest" usually refers to savings accounts and bonds, while stock market and fund returns are better described as "growth" made up of price changes and reinvested income. The maths is the same either way — this is also exactly the calculation behind our Savings Calculator and Investment Growth Calculator — but the reliability of the assumed rate is very different. A savings account's rate is contractual (within the terms offered); an investment return assumption is a best guess based on long-run historical averages, and is never guaranteed.
Frequently asked questions
Does the calculator account for inflation?
No — the figures shown are in "nominal" terms, meaning they don't adjust for the fact that £1 in the future buys less than £1 today. To see the effect of inflation on a sum of money, try our Inflation Calculator, which shows future purchasing power separately.
Does it account for charges?
No. Platform fees, fund charges, and any dealing costs would reduce the real-world outcome below what's shown here. Even a seemingly small annual charge compounds negatively in the same way interest compounds positively, which is explored in detail in our guide to ongoing charges.
What if I contribute a lump sum with no monthly top-ups?
Simply set the monthly contribution to zero and the calculator will show pure lump-sum compounding. To directly compare a lump sum against a regular monthly plan, our Lump Sum vs Regular Investment Calculator does this side by side.
Is a higher contribution or a higher rate more powerful?
Both matter, but over long time horizons the rate of return tends to dominate because it compounds on an ever-larger base. Over short horizons, how much you actually contribute tends to matter more, since there's less time for compounding to work.
Can I use this for a pension?
You can, but our dedicated Pension Growth Calculator additionally separates your own and employer contributions and uses your current age and retirement age to set the time horizon automatically.
Common mistakes when using a compound interest calculator
The most frequent error is treating the output as a promise rather than a scenario. A projection built on a single fixed rate can't capture the year-to-year ups and downs a real investment or even a variable savings rate will experience — two people who enter the same average rate but experience it in a different order (a bad first decade versus a bad last decade) can end up in very different real-world positions, an effect known as sequence-of-returns risk. It's also easy to forget to revisit the numbers: contributions, rates, and goals all change over time, and a projection is only as useful as how recently it was updated.
Another common mistake is ignoring the effect of stopping contributions early, even temporarily. Because so much of the projected growth in a long-term calculation happens in the final years — once the balance is large enough for a given percentage return to represent a meaningful cash amount — a pause in contributions early on matters less than the same pause taken later. Still, consistency compounds just as much as the money itself does, so treating contributions as a fixed, protected commitment (automated via standing order, for example) tends to produce better real-world outcomes than relying on willpower to top up manually each month.
How often should I check this projection?
Revisiting it once or twice a year — alongside a pay review, a change in goals, or simply as an annual financial check-in — is usually enough. Checking daily or weekly adds no useful information and can encourage reacting to short-term market noise that a long-term projection is designed to look past.
Does the starting amount or the monthly contribution matter more?
Over very long horizons, a larger starting amount generally has more time to compound than contributions made later, so it often ends up mattering slightly more per pound — but for most people without a large lump sum available, consistent monthly contributions are the more realistic and controllable lever to focus on.
Why does the calculator use monthly rather than annual compounding?
Monthly compounding is a closer match to how most savings and investment contributions actually happen — added throughout the year rather than as one annual lump sum — and it also very slightly increases the effective annual growth rate compared with simple annual compounding at the same headline rate, which is worth knowing when comparing this tool's output to a provider's advertised AER.
What's the single biggest lever I can pull to improve the result?
Time, in most cases. Starting five years earlier with a modest contribution frequently beats starting five years later with a much larger one, simply because compounding needs time more than it needs a large opening balance — which is the single most repeated lesson from running this kind of projection at different starting ages.