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Compound interest calculator

Work out what your savings or ISA could be worth: starting amount, monthly payments, AER and compounding frequency.

Final pot
£148,612
Total paid in
£70,000
Interest earned
£78,612

Convention: contributions paid at the end of each period, annual rate divided by the compounding frequency.

À propos de cet outil

What this calculator is for

Compound interest is what happens when the interest your money has already earned starts earning interest in turn. Instead of growing by the same amount every year, your pot grows by a larger amount each year, because each new period begins from a bigger balance. This calculator shows that effect clearly: enter a starting amount, a regular payment, an annual rate, a term in years and how often interest is compounded, and you get the final pot, the total you have paid in, and the interest earned on top.

It is designed for everyday UK saving and investing decisions. If you pay into a cash ISA or a stocks and shares ISA, the tool shows what a standing order of £250 a month could be worth in ten or twenty years. If you are building a pension through a SIPP or a workplace scheme, it gives a rough sense of what regular contributions become over a working life — before employer contributions and tax relief, which make the real figure higher. It is equally useful for a house deposit, a Lifetime ISA target, or simply comparing two savings accounts whose headline rates differ by a fraction of a percent.

The method behind the numbers

For a lump sum with no further payments the formula is FV = P × (1 + r/n)nt: P is the starting amount, r the annual rate as a decimal, n the number of compounding periods each year and t the term in years. Simple interest would pay only on the original capital and grow in a straight line; compounding curves upward, and the two diverge steadily as the term lengthens.

Where regular payments are involved, an annuity term is added: FV = P × (1 + i)N + C × [((1 + i)N − 1) / i], with i the periodic rate, N the number of periods and C the payment. This calculator assumes payments are made at the end of each period, the standard and slightly conservative convention. Note the difference between a nominal rate and AER: 6% nominal compounded monthly is an AER of 6.17%. UK savings accounts must quote AER precisely so that products with different compounding frequencies can be compared like for like.

A worked example

Take a starting amount of £10,000 with £250 paid in every month for 20 years at 6% a year, compounded monthly. The periodic rate is 0.5%, over 240 periods. The initial £10,000 grows to roughly £33,100. The monthly payments add roughly £115,500. The final pot is about £148,600, against £70,000 actually paid in — £10,000 at the start plus £60,000 of contributions — leaving around £78,600 of interest. More than half of the pot was created by the compounding itself.

Shorten the term to 10 years and the pot falls to roughly £59,000, even though you paid in only £30,000 less. The second decade contributes far more than the first, because it compounds on a much larger balance. That is why financial advisers keep repeating that time in the market matters more than the amount you start with.

Getting sensible results

Use a rate that reflects the product you actually hold. A cash ISA or easy-access savings account will track the Bank of England base rate and will not sustain double-digit returns. A globally diversified equity fund has historically returned somewhere around 7% to 8% a year nominally over long periods, with substantial volatility along the way. If you are projecting a stocks and shares ISA, run the numbers twice — once optimistically, once at 4% — and plan around the lower figure.

Deduct charges from the rate before you type it in. Platform fees plus fund charges of 0.5% to 1% a year are common, and over two decades that difference compounds against you exactly as returns compound for you. Remember inflation too: a 5% return with 3% inflation is 2% in real terms, so a pot that looks large in cash terms may buy less than you expect. And use the rule of 72 for a quick mental check — 72 divided by the rate gives roughly the number of years to double.

Finally, keep the tax wrapper in mind. Interest and growth inside an ISA are free of UK income tax and capital gains tax, while savings held outside a wrapper may use up your Personal Savings Allowance. The calculator works in gross terms and does not model any of that.

For worked scenarios and common pitfalls, see our guide: Compound interest explained for UK savers.

Important

Projections assume a fixed rate throughout the term, which no real savings or investment product guarantees. Past performance is not a guide to future performance, and the value of investments can fall as well as rise. Figures are gross, exclude tax, charges and withdrawals, and are for illustration only. This is not financial advice; speak to an FCA-regulated adviser about your own circumstances.

Frequently asked questions

What is the difference between simple and compound interest?
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Simple interest is paid only on the money you originally deposited, so £10,000 at 6% pays £600 every year without change. Compound interest is added to your balance and then earns interest itself, so year two pays £636 and year three £674. Over 30 years, £10,000 becomes £28,000 with simple interest but £57,435 with annual compounding.
What does AER actually mean?
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AER, the Annual Equivalent Rate, shows what an account pays over a year once compounding is taken into account. A nominal 6% paid monthly is an AER of 6.17%. UK savings providers must quote AER precisely so you can compare a monthly-interest account against an annual-interest one on a like-for-like basis. When comparing products, always use AER rather than the headline gross rate.
Should I use a cash ISA or a stocks and shares ISA in the projection?
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It depends on your time horizon. Cash ISAs pay a rate close to the Bank of England base rate and protect capital, which suits goals within about five years. Stocks and shares ISAs have historically delivered higher long-run returns — often modelled at 5% to 7% a year — but the value can fall, sometimes sharply. For terms of ten years or more, most people model the equity route and accept the volatility.
Does the calculator include tax and charges?
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No. Figures are gross. Money held inside an ISA grows free of UK income tax and capital gains tax, while interest outside a wrapper counts against your Personal Savings Allowance. Platform and fund charges of 0.5% to 1% a year are common and compound against you: subtract them from the rate before you type it in for a realistic projection.
How can I estimate how long my money takes to double?
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Use the rule of 72: divide 72 by the annual rate. At 6% your pot doubles in roughly 12 years, at 4% in 18 years, and at 3% in 24 years. The approximation is accurate enough for rates between about 2% and 10% and is a quick way to sanity-check any projection before you commit to a savings plan.