The most powerful force in finance. Enter a starting pot, a monthly contribution, a rate and a timeframe — see how your money grows, and how much of the final figure is pure investment growth vs. what you paid in.
Compound interest is interest earned on your interest. In year one, you earn a return on your initial investment. In year two, you earn a return on both your initial investment and the return from year one. Given enough time, the growth on previous growth becomes far larger than anything you contribute — which is why starting early matters more than contributing more.
This calculator uses monthly compounding: your contributions are added each month and the full balance earns 1/12th of the annual return each month. You can toggle between nominal returns (the raw number your broker shows you) and real returns (adjusted for inflation — what the money is actually worth in today's purchasing power).
This table shows how your pot grows each year. Notice how the growth column starts small and ends up far larger than your annual contributions — that's the compounding effect working in your favour.
| Year | Contributed | Growth | Balance |
|---|
Divide 72 by your annual return to get the approximate number of years for your money to double. At 6%, money doubles every 12 years. At 9%, every 8 years. It's rough but remarkably close to the exact compounding result and lets you sanity-check any projection in your head.
Time matters more than amount. Someone who invests £200/month from age 22 to 32 — and then stops — will usually end up with more than someone who starts at 32 and invests £200/month for 35 years straight. Starting early is mathematically worth a fortune.
| Asset mix | Typical long-run nominal return | After ~2.5% inflation (real) |
|---|---|---|
| Cash savings account | 2–4% | -0.5–1.5% |
| UK government bonds (gilts) | 3–4.5% | 0.5–2% |
| Mixed 60/40 (stocks/bonds) | 5–7% | 2.5–4.5% |
| 100% global equities (S&P 500 historical) | 8–10% | 5.5–7.5% |
| Long-run UK equities (1900–2024) | ~7.5% | ~5% |
Historical returns are not indicative of future performance. Real returns are what matter for retirement planning — nominal returns flatter your pot but don't buy you more.
A 30-year projection at 7% nominal shows eye-popping numbers, but if inflation averages 2.5%, the real spending power is only ~4.5% growth per year. Switch to the "Real" toggle above to see what your pot is actually worth in today's money.
Compound interest only works if your returns aren't taxed away each year. In the UK, prioritise these tax-sheltered wrappers in roughly this order:
| Wrapper | Allowance 2026/27 | Why it matters |
|---|---|---|
| Workplace pension (match) | Up to employer match | Free money — ~28p tax relief + employer top-up |
| Lifetime ISA | £4,000 | 25% government bonus; retirement or first home |
| Stocks & Shares ISA | £20,000 combined with other ISAs | Zero tax on growth or withdrawals, forever |
| SIPP / personal pension | £60,000 (annual allowance) | Tax relief going in; taxed as income coming out |
| General Investment Account | Unlimited | Only after above are filled — CGT and dividend tax apply |
A 1% annual fund fee looks trivial but compounds just like returns — over 30 years at 7% it removes roughly a quarter of your final pot. Prefer low-cost global index trackers (0.1–0.3% ongoing charge) over actively-managed funds (0.75–1.5%).
Pension calculator — retirement-specific projection with employer match and tax relief · ISA vs GIA — how much you lose to tax by investing outside an ISA · FIRE calculator — when your pot can support your lifestyle · Salary benchmark — how your earnings compare.
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