Compound Interest Calculator
See how your savings grow over time with the power of compound interest. Add a lump sum, regular monthly contributions, and watch the snowball effect over years.
Your details
Used to show your projected balance in today's spending power. Set to 0 to ignore inflation.
Your results
Growth of £5,000 Over 20 Years
Final balance after 20 years
£96,112
≈ £58,655 in today's money, after 2.5% inflation
Interest earned
£43,112
- Total contributed
- £53,000
- Growth
- 81%
Where the money comes from
Year-by-year projection
| Year | Contributions | Interest | Balance |
|---|---|---|---|
| 1 | £7,400 | £322 | £7,722 |
| 2 | £9,800 | £783 | £10,583 |
| 3 | £12,200 | £1,390 | £13,590 |
| 4 | £14,600 | £2,152 | £16,752 |
| 5 | £17,000 | £3,075 | £20,075 |
How compound interest works
Compound interest means earning interest on your interest, not just on your original deposit. Each period, the interest you've already earned is added to your balance and itself starts generating returns. Over long time horizons, this creates exponential growth rather than linear growth.
A simple example: £10,000 invested at 5% per year for 20 years. With simple interest you'd earn £10,000 in interest, ending with £20,000. With annual compounding you'd end with £26,533, an extra £6,533 purely from compounding. The more frequently interest compounds (monthly vs annually), the greater the effect.
The Rule of 72
A quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6%, your money doubles in roughly 12 years. At 4%, about 18 years. At 9%, just 8 years.
This rule illustrates why rate of return matters so much over long periods. The difference between a 4% and a 7% return on a pension pot over 30 years is not 75% more money, it's more than double, thanks to compounding.
Regular contributions amplify the effect
Adding regular contributions, monthly savings into an ISA or pension, supercharges compounding further. Each new contribution starts compounding from the day it's deposited, meaning earlier contributions have the longest runway. This is why starting to save in your 20s versus your 40s can result in dramatically different outcomes even with the same total contributions.
The calculator above models both a lump sum and regular monthly contributions. Try increasing the monthly contribution by a small amount, even £50/month extra over 20 years at 5% adds over £20,000 to the final pot.
Where to find compound interest working for you
The most powerful applications of compound interest in personal finance are pensions and Stocks & Shares ISAs. Both shelter returns from tax, allowing the full compounding effect to work without annual tax drag. Cash ISAs and savings accounts compound too, but lower interest rates limit the effect, over 20–30 years the difference between a cash return and an equity return is substantial.
Related calculators
Frequently asked questions
Compound Interest Guide
Why compound interest is the most powerful force in personal finance
Compound interest means earning interest on your interest, not just on the money you put in. Over short periods the effect is modest; over decades it becomes extraordinary. A single £10,000 investment at 7% per year grows to £76,123 after 30 years without adding another penny. The same £10,000 at simple interest would only reach £31,000.
How compounding frequency affects growth
Interest can compound at different frequencies, annually, monthly, or daily. The more frequently interest is added to the principal, the faster the balance grows. A 5% annual rate compounded monthly is effectively 5.116% per year (the Annual Equivalent Rate, or AER). Most UK savings accounts quote the AER so you can compare products on a like-for-like basis. When comparing accounts always use AER, not the gross rate.
The Rule of 72
A quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6% your money doubles in roughly 12 years (72 ÷ 6). At 9% it doubles in about 8 years. The rule works for any compounding rate and gives a useful sanity check on the calculator's output.
Compound interest works against you too
The same mathematics that grows your savings also grows your debts. A £3,000 credit card balance at 24.9% APR accrues roughly £62 of interest in the first month. If you only pay the minimum, you're barely covering the interest, your balance barely moves. This is why clearing high-interest debt before prioritising savings almost always makes mathematical sense.
Inflation: the silent tax on compound growth
A nominal return of 5% with 3% inflation gives you a real return of roughly 2%. Over 30 years the difference between nominal and real growth is enormous: £10,000 at 5% nominal grows to £43,219 in cash terms, but in today's purchasing power it's closer to £18,114 in real terms. When planning long-term savings always think in real (inflation-adjusted) returns rather than headline rates.
How £10,000 grows over time
Lump sum, no additional contributions. Compounded annually.
| Years | 3% | 5% | 7% | 10% |
|---|---|---|---|---|
| 5 | £11,593 | £12,763 | £14,026 | £16,105 |
| 10 | £13,439 | £16,289 | £19,672 | £25,937 |
| 20 | £18,061 | £26,533 | £38,697 | £67,275 |
| 30 | £24,273 | £43,219 | £76,123 | £174,494 |
| 40 | £32,620 | £70,400 | £149,745 | £452,593 |
Past returns are not a guide to future performance. Investment returns are not guaranteed.
How this calculator works
- What it calculates
- The future value of a lump sum investment or regular contributions (or both) at a given annual interest rate, compounded at a chosen frequency, over a set number of years.
- The maths
- FV = P(1 + r/n)^(nt) + C × [(1 + r/n)^(nt) − 1] / (r/n), where P = principal, r = annual rate, n = compounding periods per year, t = years, C = regular contribution.
- Key assumptions
- Constant interest rate over the full period
- Contributions made at the start of each period
- No tax on interest (assumes ISA or within PSA)
- When it may not be accurate
- Interest rates on savings accounts change frequently. Investment returns vary year to year and can be negative. This calculator does not account for inflation, taxes on gains outside an ISA, or platform fees. For real financial planning, consult a financial adviser.
Sources & methodology
Built and maintained by UK Money Tools, a personal finance resource (not a financial adviser). Last reviewed April 2026. Rates and thresholds come from official UK government publications.
Figures are estimates only. This is not financial or tax advice. For help with your specific situation, speak to HMRC or a qualified adviser.