About the Compound Interest Calculator
Compound interest gets described as the eighth wonder of the world, which is not especially useful when you are three years in and the balance looks like a slightly generous savings account.
The formula is the easy part:
A = P(1 + r/n)^(nt)The useful part is the shape of what it produces, and the single most important thing about that shape is how long it takes to become obvious. For the first decade or more of a typical plan, most of your balance is simply money you put in. Growth overtakes contributions much later than people assume, and the years before that are exactly when people give up.
So this calculator computes that crossover explicitly, alongside the balance.
How to Use the Compound Interest Calculator
Enter your starting amount and what you are adding each period. Either can be zero, but not both.
Add the annual rate and the number of years.
Then how often it compounds — annually through to daily — and whether contributions are paid at the start or end of each period.
Negative rates are allowed. Real returns after inflation are sometimes negative, and the calculator reports the loss rather than refusing.
When Growth Takes Over
£10,000 to start, £400 a month, 7% compounded monthly:
| Year | Balance | Paid in | Growth | Growth's share |
|---|---|---|---|---|
| 5 | 42,813.41 | 34,000 | 8,813.41 | 21% |
| 10 | 89,330.54 | 58,000 | 31,330.54 | 35% |
| 15 | 155,274.39 | 82,000 | 73,274.39 | 47% |
| 20 | 248,758.05 | 106,000 | 142,758.05 | 57% |
| 25 | 381,282.86 | 130,000 | 251,282.86 | 66% |
| 30 | 569,153.37 | 154,000 | 415,153.37 | 73% |
| 40 | 1,213,039.47 | 202,000 | 1,011,039.47 | 83% |
Growth does not overtake contributions until 16 years and 4 months.
Read the first row again. After five years of paying in £400 every month, £34,000 of that £42,813 is yours and £8,813 is growth. Nothing about that feels like a wonder of the world. It feels like a savings account with a decent rate, and that is the honest experience of the first stretch.
By year forty, 83% of the balance is growth and the contributions have become a rounding error. The whole return on patience arrives at the end, which is precisely why patience is the hard part.
The rate decides how long the wait is:
| Rate | Growth overtakes contributions at |
|---|---|
| 9% | 12 years 5 months |
| 7% | 16 years 4 months |
| 5% | 23 years 5 months |
| 3% | never, within 40 years |
Compounding Frequency Barely Matters
Accounts advertise daily compounding as though it were a meaningful advantage. It is not, and it is easy to show.
Taking the £10,000 opening balance alone over 25 years at 7%:
Annually: 54,274.33
Monthly: 57,254.18
Continuously: 57,546.03The entire range from the least to the most frequent compounding possible is £3,271.70.
Now change the rate by one percentage point instead:
7% annually: 54,274.33
8% annually: 68,484.75 → +14,210.43One point of rate is worth more than four times the whole frequency spectrum. If you are choosing between accounts, the rate is the number. The compounding frequency is a detail worth knowing about and not worth optimising.
What frequency does change meaningfully is the effective annual rate: 7% compounded monthly is an effective 7.23%. That is the figure to compare accounts on when their compounding differs, and it is what APY expresses on savings products.
Timing Is Worth More Than Frequency
Two small things about contributions, one worth much more than the other.
Start of period against end. Paying at the start gives every contribution one extra period of growth. Over 25 years that is worth £1,890.17 on these figures — real, free, and small.
Monthly against annually. Paying £4,800 once a year rather than £400 a month is the same money and gives £357,869.71 instead of £381,282.86. That is £23,413 for nothing but paying in sooner.
The lesson is not about compounding frequency at all. It is that money in the account earlier is money growing for longer, and contribution timing is a bigger lever than anything the account's terms will offer you.
Step-by-Step Example
£10,000 start, £400 a month, 7%, monthly, 25 years.
Rate per period: 7% ÷ 12 = 0.583333%
Periods: 25 × 12 = 300
Opening balance:
10,000 × (1.00583333)³⁰⁰ = 57,254.18
Contributions:
400 × [(1.00583333)³⁰⁰ − 1] ÷ 0.00583333
= 324,028.68
Total 381,282.86
Paid in: 10,000 + (400 × 300) = 130,000.00
Growth: 381,282.86 − 130,000 = 251,282.86 (66%)Notice that the contributions build to £324,029 while the opening £10,000 becomes £57,254. On a long horizon with regular saving, what you add matters more than what you start with — which is the encouraging half of the story, given that starting amounts are usually the part people cannot change.
Understanding Your Result
Final balance is what you end with.
Paid in against growth splits it, and the share is the number to watch over time.
Effective rate is your nominal rate adjusted for compounding — the fair basis for comparing accounts.
When growth takes over is the crossover year, and the most useful line on the page if you are early in a plan.
Worth knowing interprets which phase you are in.
When Should You Use This Calculator?
At the start of a savings plan. Knowing the crossover is years away makes the early stretch survivable rather than discouraging.
Comparing accounts. Use the effective rate, not the headline rate, when compounding frequencies differ.
Deciding between a lump sum and regular saving. Run both and compare — over long horizons contributions usually dominate.
Testing what one more point of return is worth. It is almost always more than any structural feature of the account.
Modelling a real return. Enter your expected return minus inflation to see the growth in today's money, which is the figure that actually matters.
Common Mistakes
Giving up in the flat part. The first decade looks unremarkable by design. The table above is what is coming.
Chasing compounding frequency. Worth £3,272 over 25 years against £14,210 for one point of rate.
Comparing nominal rates across different compounding. Use the effective rate.
Forgetting inflation. 7% nominal with 3% inflation is roughly 4% real, and over 25 years that difference is enormous. Enter the real rate if you want the answer in today's money.
Ignoring tax and charges. A 1% annual fee comes straight off the rate, and given how much one point of rate is worth here, that is not a small deduction.
Assuming the rate is fixed for decades. It will not be. Run a range rather than a single figure.
Reading a projection as a promise. Investment returns are not interest rates and do not arrive smoothly. Every figure here is an estimate for planning, not financial advice.