Compound Interest Calculator

See how your money grows over time with the power of compound interest and regular contributions.

Share this result set

Every input you change updates the URL. Copy the link to send your exact scenario to a partner, accountant or friend.

Calculator inputs

Starting amount£10,000

Regular contribution£500

Contribution frequency

Estimated annual return7%

Time period (years)20 yrs

yrs

What happens to my data?

All calculations run in your browser. Nothing is sent to our servers. Copy the link to share.

Final balance

£300,851

Total invested

£130,000

Interest earned

£170,851

Interest share

56.8%

Invested £130,000Interest £170,851

Invested Interest

The cost of waiting

Start now

£300,851

Wait 10 years

£106,639

What the delay costs you£194,212

Same contribution, fewer years compounding. Illustrative, not a forecast.

Ready to start investing?

Open a Stocks & Shares ISA and put compound interest to work with a real portfolio.

Compare ISA providers

Some links are affiliate links. You pay nothing extra.

Growth over time

Total invested Interest earned

Year-by-year breakdown

Year	Starting	Contributions	Interest	End balance
1	£10,000	£6,000	£919	£16,919
2	£16,919	£6,000	£1,419	£24,339
3	£24,339	£6,000	£1,956	£32,294
4	£32,294	£6,000	£2,531	£40,825
5	£40,825	£6,000	£3,148	£49,973
Put your savings to work - compare high-interest savings accounts and ISAs. See our picks
6	£49,973	£6,000	£3,809	£59,782
7	£59,782	£6,000	£4,518	£70,299
8	£70,299	£6,000	£5,278	£81,578
9	£81,578	£6,000	£6,094	£93,671
10	£93,671	£6,000	£6,968	£106,639
11	£106,639	£6,000	£7,905	£120,544
12	£120,544	£6,000	£8,910	£135,455
13	£135,455	£6,000	£9,988	£151,443
14	£151,443	£6,000	£11,144	£168,587
15	£168,587	£6,000	£12,383	£186,971
16	£186,971	£6,000	£13,712	£206,683
17	£206,683	£6,000	£15,137	£227,820
18	£227,820	£6,000	£16,665	£250,486
19	£250,486	£6,000	£18,304	£274,790
20	£274,790	£6,000	£20,061	£300,851

Embed this calculator on your site

Paste this snippet wherever you'd like the calculator to appear. Free to use, no account required, attribution preserved.

<iframe
  src="https://freedomisntfree.co.uk/tools/compound-interest-calculator?embed=1"
  width="100%"
  height="820"
  style="border: 1px solid #e5e7eb; border-radius: 12px; max-width: 720px;"
  loading="lazy"
  title="Freedom Isn't Free calculator"
  referrerpolicy="no-referrer-when-downgrade"
></iframe>

The iframe auto-resizes to fit content if your page listens for fif-embed-resize postMessage events.

The complete guide

Compound Interest Calculator: How It Works

Use our free compound interest calculator to project ISA, SIPP, and investment growth. Learn how compounding works and tips to grow your wealth faster.

Albert Einstein is often credited with calling compound interest the eighth wonder of the world. Whether he actually said it or not, the idea holds up. Compound interest is one of the most powerful forces available to ordinary investors, and understanding it can change the way you think about saving and investing for the rest of your life.

Past performance does not guarantee future returns. Figures in this guide are illustrative projections, not forecasts. Investment values can fall as well as rise and you may get back less than you put in. This is not personal financial advice.

We built a free compound interest calculator to help you see exactly how your money could grow over time. Below, we explain what compound interest is, walk you through how to use the calculator, and share practical tips for making the most of it.

What Is Compound Interest?
How to Use the Compound Interest Calculator
Common Use Cases
The Maths Behind Compound Interest
Tips to Maximise Compound Interest
Author's Take

What Is Compound Interest?

Compound interest is interest earned on both your original investment and on the interest that has already been added. In other words, your returns start generating their own returns.

Compare this with simple interest, where you only earn interest on the original amount. With simple interest, growth is linear. With compound interest, growth accelerates over time because your base keeps getting larger.

Here is a worked illustration. Suppose you invest 10,000 pounds into a Stocks and Shares ISA that hypothetically returns an average of 7% per year. After one year, you would have 10,700 pounds. In the second year, you earn 7% on 10,700 pounds - not just the original 10,000. That gives you 11,449 pounds. The difference seems small early on, but over 20 or 30 years the effect can be dramatic, assuming the rate of return holds (real-world returns vary year to year and can be negative).

On that illustrative 7% per year basis, after 10 years the 10,000 pounds would grow to roughly 19,672 pounds, after 20 years to around 38,697 pounds, and after 30 years to approximately 76,123 pounds - all without adding a single extra penny. That is compound interest at work, on paper. Actual investment returns will differ.

£10,000 at 7%, no further contributions

Inside a Stocks and Shares ISA, this growth is entirely tax-free, making it one of the best vehicles for UK investors to build long-term wealth.

Compound interest calculator showing growth chart and year-by-year breakdown for a 10,000 pound investment at 7% annual return

How to Use the Compound Interest Calculator

Our compound interest calculator is designed to be straightforward. Here is how to use it step by step:

Step 1: Enter Your Initial Investment

Type in the lump sum you are starting with. This could be your current ISA balance, a savings pot, or even zero if you are starting from scratch.

Step 2: Set Your Monthly Contribution

Enter the amount you plan to add each month. Even small regular contributions make a significant difference over time. If you have already set up a budget, you will know exactly how much you can afford to put aside.

Step 3: Choose Your Interest Rate

Enter the annual rate of return you expect. For a diversified portfolio of low-cost index funds, a commonly used long-term nominal assumption is 7-8% per year based on historic averages, which is not a guarantee of future returns. Cash savings rates vary over time and depend on the product and provider - check current Bank of England base rate and provider AER before assuming a figure. Be realistic here - the output is only as useful as the inputs.

Step 4: Set the Time Period

Enter the number of years you plan to invest. The longer the time horizon, the more dramatic the compounding effect becomes.

Step 5: Choose Compounding Frequency

Select how often interest is compounded: daily, monthly, or yearly. Most investment platforms compound daily or monthly. The more frequently interest compounds, the faster your money grows, though the difference between daily and monthly compounding is usually small.

Step 6: Review Your Results

The calculator displays a growth chart showing how your money increases over time, along with a year-by-year breakdown table so you can see exactly what is happening at each stage. You can also export your results to CSV for your own records or further analysis.

If you are logged in, you can save your inputs to your financial profile to revisit them later or compare different scenarios.

Common Use Cases

ISA Planning

The annual ISA allowance for the 2026/27 tax year is 20,000 pounds. Use the calculator to model what happens if you max out your ISA each year versus contributing a smaller monthly amount. Seeing the long-term projections can be a strong motivator to prioritise your ISA contributions.

individual savings accounts - www.gov.uk

SIPP Retirement Planning

A Self-Invested Personal Pension (SIPP) benefits from tax relief on contributions, which effectively boosts your investment. If you contribute 800 pounds, the government tops it up to 1,000 pounds (for basic rate taxpayers). Plug these boosted figures into the calculator to see how your retirement pot could grow. Once you know your target number, check our FI number calculator to see when you might be able to step away from work.

General Investment Account (GIA)

Not everything fits inside an ISA or SIPP. A General Investment Account has no contribution limits, but gains are subject to Capital Gains Tax. Use the calculator to project your GIA growth, keeping in mind that the actual returns after tax will be somewhat lower than the headline figure.

Saving for a House Deposit

If you are saving for a first home, the calculator can help you figure out how long it will take to reach your target deposit. You might also consider a Lifetime ISA, which adds a 25% government bonus on contributions up to 4,000 pounds per year. Model different monthly savings amounts to find a realistic timeline.

The Maths Behind Compound Interest

The standard compound interest formula is:

A = P(1 + r/n)^(nt)

Where:

A = the final amount
P = the principal (your initial investment)
r = the annual interest rate (as a decimal, so 7% = 0.07)
n = the number of times interest compounds per year
t = the number of years

For example, 10,000 pounds at 7% compounded monthly for 10 years:

A = 10,000 x (1 + 0.07/12)^(12 x 10) = 10,000 x (1.005833)^120 = approximately 20,097 pounds.

When you add regular monthly contributions, the formula becomes more involved. That is exactly why the calculator exists - so you do not need to do this by hand.

Tips to Maximise Compound Interest

Start as Early as Possible

Time is the most important ingredient in compounding. On most realistic long-term return assumptions, someone who invests 200 pounds per month from age 25 ends up with more than someone who invests 400 pounds per month from age 35, even though the late starter contributes more money overall. Actual outcomes depend on the returns achieved, but as a rule of thumb every year you delay costs you future growth.

Make Regular Contributions

Lump sums are great, but consistent monthly investing is what most people can actually sustain. Set up a direct debit into your ISA or SIPP so that investing happens automatically. This also smooths out the price you pay for investments over time, a concept known as pound cost averaging.

Reinvest Dividends

If your investments pay dividends, reinvest them rather than taking them as cash. Reinvested dividends buy more shares, which generate more dividends, which buy more shares. This is compounding in its purest form. Most platforms offer an automatic reinvestment option - make sure it is switched on.

Keep Costs Low

Fund fees eat directly into your returns, and the drag compounds just like your growth does. As an illustration, on a 200 pounds per month contribution at an assumed 7% gross return over 30 years, the difference between a 1.5% ongoing fee and a 0.1% fee runs into tens of thousands of pounds. Stick with low-cost index trackers where possible.

Track Your Progress

Use our net worth tracker alongside the compound interest calculator to monitor how your actual results compare with your projections. Seeing your wealth grow in real time reinforces good habits and keeps you motivated during the inevitable market dips.

Know Your Target

If you are pursuing financial independence, calculate your FIRE number first. Then use the compound interest calculator to work backwards and figure out how much you need to save each month to get there.

Author's Take

Michael McGettrick

Founder, Freedom Isn't Free

The first time compound interest properly clicked for me was in 2018 when I was trying to scrape together a house deposit. I sat down with a spreadsheet to work out how long it would take, and somewhere in that exercise I dragged the formula across a few decades to see what would happen if I kept saving past the deposit. The number that came out the other side made me put the laptop down. The maths was not subtle. A few hundred pounds a month, sustained for thirty years, compounded into a number I had not previously believed was achievable on my salary.

That moment is the entire reason this site exists. Compound interest is the most powerful idea in personal finance and it is also the easiest one to ignore, because it does not feel like anything when you are doing it. The first ten years of compounding look almost flat on a graph. The last ten look like you cheated. For years afterwards I kept coming back to online compound interest calculators - punching in different monthly contributions, different time horizons, different return rates - using the projections as motivation to keep saving when the present-day balance felt small. If you are at the start of the curve and the numbers are looking unimpressive, you are exactly where you are supposed to be. Run it again with thirty years on the dial. The point of compound interest is that you have to wait for it.

Get Started

Numbers on a page are one thing. Seeing your own projections is another. Try the compound interest calculator now and model different scenarios for your ISA, SIPP, or general investments. Even a few minutes of experimenting can give you a much clearer picture of where your money is heading.

Further Reading:

The Psychology of Money - Morgan Housel - A brilliant exploration of how behaviour and patience matter more than financial knowledge when it comes to building wealth through compounding. (Affiliate link - we may earn a small commission at no extra cost to you.)

The Little Book of Common Sense Investing - John Bogle - The definitive case for low-cost index fund investing, which pairs perfectly with a long-term compounding strategy. (Affiliate link - we may earn a small commission at no extra cost to you.)

Frequently asked questions

How is compound interest calculated?

Future value = Principal x (1 + r/n)^(n x t), where r is the annual rate, n is the number of compounding periods per year, and t is the number of years. Most platforms compound monthly or daily; the difference between daily and monthly compounding on the same headline rate is small (around 0.05% per year on a 7% rate).

What return rate should I assume for UK investments?

For a globally diversified equity portfolio (e.g. Vanguard FTSE Global All Cap), historic long-run nominal returns have been around 7-8% per year, which is not a guarantee of future returns. In real terms (after inflation), that historic figure drops to roughly 5%. Cash savings rates move with the Bank of England base rate and vary by provider, and have historically delivered roughly 0-1% real once inflation is netted off.

How much does starting early actually matter?

More than people realise. As an illustration only, £200/month at an assumed 7% real return compounds to about £528,000 over 40 years (age 25 to 65). The same £200/month over 30 years (age 35 to 65) projects to only £244,000. Starting ten years later more than halves the projected result. These figures are illustrative, not forecasts - actual returns vary. Time, not contribution amount, does most of the heavy lifting.

Should I use this calculator for cash savings or investments?

Both work. For cash, use the headline AER as the rate and pick monthly compounding. For investments, a commonly used assumption is a real return of 4-5% (or 7-8% nominal), and yearly compounding - investments do not literally compound at a fixed daily rate, so a single annual figure is the cleanest approximation. Cash returns are reasonably predictable over short horizons; investment returns vary year to year and can be negative, so any single-rate projection is an illustration, not a forecast.

Does the calculator account for tax?

No, the calculator gives you the gross compounded figure. To approximate after-tax returns inside a GIA, reduce your rate by 1 to 2 percentage points to account for dividend tax and gains-tax drag. Inside an ISA or SIPP, growth is tax-free, so the calculator output is what you actually get.

Why does the difference between 7% and 10% explode at 40 years?

Compound growth scales exponentially with the rate, not linearly. The gap between 7% and 10% compounds on itself every year, so what starts as a 3 percentage point difference becomes a 3x difference in end value over four decades. This is why a few tenths of a percent in platform fees matter so much over a working lifetime - they compound on the wrong side of the equation.

Does the calculator account for inflation?

The calculator shows nominal returns. To estimate real (inflation-adjusted) growth, subtract an assumed inflation rate from your interest rate. For example, if you expect 7% nominal returns and 2.5% inflation, enter 4.5% to see your purchasing power growth.

How often should interest compound for best results?

More frequent compounding produces slightly higher returns. Daily compounding beats monthly, which beats yearly. In practice, the difference between daily and monthly compounding is small. Most investment platforms compound on a daily basis.

Is compound interest only relevant for stocks?

No. Compound interest applies to any situation where returns are reinvested. This includes savings accounts, bonds, peer-to-peer lending, and property (if rental income is reinvested). The principle is the same: your returns generate further returns.

How much difference do monthly contributions really make?

A large difference, on most return assumptions. As an illustration, starting with £5,000 and adding £200 per month at an assumed 7% per year for 25 years projects to roughly £186,000. Without those monthly contributions, the same £5,000 projects to only about £27,000 on the same rate. These are illustrative compounding figures, not forecasts - real returns vary. Regular contributions are the engine that drives long-term wealth building.