Compound Interest Calculator
See how a starting balance and regular contributions grow with compound interest. Pick how often the interest compounds, how often you pay in, and whether to adjust for inflation. The breakdown shows the first five years, then five-year jumps, and the final year of the term.
Explain like I'm 5 (what even is this calculator?)
Put some money in a pot that pays interest. Each time the interest is added, the pot gets a bit bigger, so next time's interest is also a bit bigger. Over years, this snowballs. This tool shows you how big the pot gets, including any money you keep adding along the way.
Calculate
Enter your numbers, then press Calculate.
Summary
- Final balance–
- Total you'll have paid in–
- Of which contributions–
- Total interest earned–
Adjusted for inflation
- Final balance in today's money–
Year-by-year
| Year | Balance | Contributed to date | Interest to date |
|---|
Prove it
For monthly or daily compounding with monthly contributions, the calculator iterates month by month: each month the balance grows by the effective monthly rate, then the contribution is added (or, if you pick "start of period", the contribution is added first and then earns that month's interest too). For daily compounding we use the equivalent monthly rate (1 + r/365)365/12 − 1 for speed; the answer matches a true daily simulation to within a pound over decades. For annual compounding with annual contributions, we iterate year by year using A = P(1 + r)t. The real balance divides the final balance by (1 + inflation)years.
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What compound interest actually is
If you put £1,000 into an account paying 5% a year, at the end of year one you have £1,050. Simple interest would keep paying you £50 a year on the original £1,000. Compound interest pays 5% on the new balance, so year two earns £52.50, year three £55.13, and so on. The pot grows a little faster each year because each year's interest joins the balance that earns interest next year. Over a long enough horizon, that small effect stops being small.
This is the single most important idea in personal finance and the reason starting early matters more than paying in a lot. Ten years of small, consistent contributions usually beat five years of large ones, even if the total paid in is the same.
Compounding frequency and what it really changes
"Annual" compounding means interest is added once a year. "Monthly" means 12 times a year, "daily" means 365 times. At typical savings rates the difference between monthly and daily is marginal, measured in a few pounds per thousand over a decade. The bigger jump is from annual to monthly. If your product quotes an AER (Annual Equivalent Rate), the AER already bakes the compounding frequency in, so you can compare products on a like-for-like basis.
Use the compounding selector to see how much the frequency matters for your own numbers. For most real-world products, monthly is the sensible default.
Regular contributions
Most people are not starting with a lump sum, they are paying in a bit every month. The calculator handles that directly: pick a contribution amount, pick monthly or annual, and choose whether the contribution lands at the start or end of the period. "Start of period" means the money earns that period's interest too, which over decades is worth a surprising amount.
Why inflation matters
A pound in 20 years is not worth a pound today. The inflation toggle divides the final balance by the cumulative inflation over the term, giving you the "real" value in today's money. If your investment grows at 5% and inflation runs at 3%, your real return is closer to 2%. The nominal balance still goes up. The purchasing power grows more slowly.
Use 2% to 3% as a rough long-run assumption for the UK or US. Pick your own number if you think inflation will be higher or lower over your specific horizon.
What this tool does not do
It assumes a constant rate and constant contributions. It does not model variable-rate accounts, tax on interest (like basic-rate tax for UK savers outside an ISA), fund fees, withdrawal penalties, or market volatility. For a cash ISA or fixed-rate bond, the numbers are close to reality. For a stocks and shares ISA or a 401(k), the answer is a smoothed best-case; real returns bounce around year to year.
Nothing on this page is financial advice. For an investment decision that matters, talk to a qualified adviser who can factor in your full picture.
Related calculators
Compounding cuts both ways. These are the related sums.
Frequently asked questions
What is compound interest?
Interest calculated on the original balance plus all the interest already earned. Because the balance keeps growing, each period's interest is slightly larger than the last. Over time the effect snowballs.
Does compounding frequency make a big difference?
Annual to monthly is the bigger jump. Monthly to daily is usually small, often less than a percent over a decade at typical rates. Use the selector on the calculator to see it for your own numbers.
Why is the real balance lower than the final balance?
Real balance adjusts for inflation. A pound in 2046 is worth less than a pound today because prices rise. The real balance tells you what the final amount is worth in today's money.
Does this calculator send my numbers anywhere?
No. Everything runs in your browser. The numbers you type never leave your device.