Compound Interest Calculator
Enter a starting pot, a monthly contribution, a rate and a timeframe to see how the money could grow, and how much of the final figure is investment growth rather than what you paid in.
What is compound interest?
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, growth on earlier growth can become larger than the money paid in, which is why the length of time invested matters as well as the amount.
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).
Your inputs
Year-by-year breakdown
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. Long projections show every fifth year on screen; the PDF download includes every year.
| Year | Contributed | Growth | Balance |
|---|
The Rule of 72 — a mental shortcut
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 does much of the work. At a steady 7% a year (an illustrative assumption, compounded monthly), someone who invests £200 a month from 22 to 32 and then stops has about £398,000 at 67, from £24,000 paid in. Someone who invests £200 a month from 32 to 67 pays in £84,000 and has about £360,000. At 5% a year the order flips (about £178,000 against £227,000), so the result depends on the return, which is not guaranteed.
What return rate should I use?
There is no correct figure. The rates below are assumptions for testing the calculator, for illustration only (check current rates before relying on a cash figure); they are not forecasts or records of past returns, and actual returns vary from year to year and are not guaranteed.
| Asset mix | Illustrative nominal return | After 2.5% inflation (real) |
|---|---|---|
| Cash savings account | 2–4% | -0.5–1.5% |
| UK government bonds (gilts) | 3–4.5% | 0.5–2.0% |
| Mixed 60/40 (stocks/bonds) | 5–7% | 2.4–4.4% |
| 100% global equities | 8–10% | 5.4–7.3% |
Past returns are not a guide to future returns. Real returns show what the pot would buy in today's money; nominal figures look larger but include inflation.
A 30-year projection at 7% nominal produces large numbers, but if inflation averages 2.5%, the growth in spending power is about 4.4% a year ((1.07 ÷ 1.025) − 1). The "Real" toggle above shows the pot in today's money.
Where to put the money
Compound growth works best when returns are not taxed away each year. These are the main UK tax wrappers and how each is treated. Which order suits a household depends on its circumstances, including when it needs the money and whether an employer contributes.
| Wrapper | Allowance 2026/27 | How it is taxed |
|---|---|---|
| Workplace pension | Set by the scheme, within the annual allowance | Tax relief on contributions, plus any employer contribution; normally locked until the minimum pension age (55, rising to 57 from 6 April 2028) |
| Lifetime ISA | £4,000 | 25% government bonus; for a first home up to £450,000 or from age 60 |
| Stocks & Shares ISA | £20,000 combined with other ISAs | No UK tax on interest, dividends or gains inside the ISA, and withdrawals are tax-free |
| SIPP / personal pension | £60,000 (annual allowance) | Tax relief going in; withdrawals beyond the tax-free lump sum are taxed as income |
| General Investment Account | No limit | No tax shelter: CGT, dividend tax and Income Tax on interest can apply above the allowances |
A 1% annual fund charge looks small but compounds like returns. On a lump sum invested for 30 years at 7% a year before charges, a 1% charge leaves about three-quarters of the pot the same investment would have reached with no charge. A fund's ongoing charges figure (OCF), shown in its key information document, is the number to compare; taking it off the return you enter here shows its effect.
Related calculators
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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