Compound Interest Calculator

The power of compound interest

Enter your starting amount, expected annual return, time horizon and monthly contribution. The calculator shows your future value, total contributions, interest earned and a stacked growth chart so you can see how earnings overtake contributions over time.

Formula

Future value = P × (1 + i)ⁿ + PMT × [(1 + i)ⁿ − 1] ÷ i, where P is the starting amount, PMT is the contribution per period, i is the periodic rate and n is the number of periods.

This is a projection based on a constant return rate. Real investment returns fluctuate and are not guaranteed.

Frequently Asked Questions

What is compound interest?

Compound interest is interest earned on both your original amount and on previously earned interest. Over long periods this "interest on interest" effect drives most of your growth.

How is compound interest calculated?

Lump-sum future value = principal × (1 + i)ⁿ, where i is the periodic rate and n is the number of periods. Recurring contributions add an annuity term: contribution × [(1 + i)ⁿ − 1] ÷ i.

Does compounding frequency matter?

Yes. More frequent compounding (monthly vs. annually) produces a slightly higher ending balance for the same nominal rate, because interest is reinvested sooner.

Can I shelter the growth from tax?

Within a Stocks and Shares ISA or a cash ISA your interest, dividends and gains are tax-free, so your money can compound without being reduced by tax each year. Annual ISA allowances apply.

What return rate should I use?

Use a realistic expected return for your investments. A diversified global equity portfolio has historically averaged a mid-single-digit real return, but returns vary year to year and are never guaranteed.