Compound Interest Calculator
See how a lump sum and regular monthly contributions could grow — and separate what you put in from the interest compounding adds.
Year-by-year breakdown
| Year | Opening | Contributed | Interest | Closing |
|---|---|---|---|---|
| 1 | £10,000.00 | £3,000.00 | £821.04 | £13,821.04 |
| 2 | £13,821.04 | £3,000.00 | £1,097.25 | £17,918.29 |
| 3 | £17,918.29 | £3,000.00 | £1,393.46 | £22,311.75 |
| 4 | £22,311.75 | £3,000.00 | £1,711.06 | £27,022.81 |
| 5 | £27,022.81 | £3,000.00 | £2,051.63 | £32,074.44 |
| 6 | £32,074.44 | £3,000.00 | £2,416.80 | £37,491.24 |
| 7 | £37,491.24 | £3,000.00 | £2,808.39 | £43,299.63 |
| 8 | £43,299.63 | £3,000.00 | £3,228.28 | £49,527.91 |
| 9 | £49,527.91 | £3,000.00 | £3,678.54 | £56,206.45 |
| 10 | £56,206.45 | £3,000.00 | £4,161.30 | £63,367.75 |
How your money grows
The balance split between money contributed and compound interest at the end of each year.
How compound interest works
Growth on growth
Compound interest adds each period’s growth to the balance, so the next period earns a return on both the original money and all earlier growth. For a lump sum:
FV = P × (1 + r)n
P is the starting principal, r is the rate per compounding period and n is the number of periods. Regular contributions join the balance month by month and compound from then on.
Frequency and contribution timing
The annual nominal rate is converted to an equivalent monthly factor for annual, quarterly, monthly or daily compounding. A contribution made at the start of a month receives that month’s growth; one made at the end starts growing in the following month.
Worked example
Starting with £10,000, adding £250 at the end of every month and earning 7% compounded monthly for 25 years contributes £85,000 in total. The month-by-month projection reaches £259,772.03: £85,000 contributed and £174,772.03 added by growth, with every month rounded to the nearest penny.
What this projection leaves out
Returns are assumed rather than guaranteed and are held constant. Tax wrappers, Capital Gains Tax, dividend tax, fund charges, dealing costs and platform fees are not included, so reduce the assumed return if you want to allow approximately for recurring costs.
Sources: MoneyHelper savings calculator, Bank of England inflation calculator, FCA InvestSmart.
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Frequently asked questions
What is compound interest and how is it calculated?
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Compound interest means earning growth on both the money contributed and the growth already added. For a lump sum, the future value is principal multiplied by one plus the periodic rate, raised to the number of periods. Regular contributions are added to the balance each month and then take part in future growth.
How often should interest be compounded?
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Use the frequency stated by the savings account or investment assumption. At the same nominal annual rate, more frequent compounding produces a slightly higher effective return because growth is credited sooner. The difference is usually modest compared with the return rate, term and amount contributed.
Does contributing at the start or end of the month matter?
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Yes. A contribution made at the start of each month receives one more month of growth than the same contribution made at the end. The difference is small at first but compounds over a long term, so choose the timing closest to when money actually leaves your account.
How does inflation affect the result?
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Inflation reduces what a future balance can buy. Turning on today’s-money values discounts each projected balance by the inflation rate, so you can compare its estimated purchasing power with money today. It does not change the nominal balance in the account.
Does this calculator include tax, investment fees or platform charges?
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No. It is a growth projection before tax and fees. It does not model ISA or pension tax treatment, Capital Gains Tax, dividend tax, fund charges, dealing costs or platform fees. Reduce the return assumption if you want to allow approximately for recurring costs.