Compound Interest Calculator
See how disciplined investing plus the eighth wonder of the world, compound interest, can turn small monthly contributions into serious wealth.
Inputs
Portfolio growth
20 year projectionYearly breakdown
Real value adjusted for 3% inflation| Year | Contributions | Balance | Real value |
|---|---|---|---|
| 1 | £16,000 | £17,192 | £16,691 |
| 2 | £22,000 | £25,058 | £23,620 |
| 3 | £28,000 | £33,663 | £30,806 |
| 4 | £34,000 | £43,074 | £38,271 |
| 5 | £40,000 | £53,369 | £46,036 |
| 6 | £46,000 | £64,629 | £54,126 |
| 7 | £52,000 | £76,945 | £62,564 |
| 8 | £58,000 | £90,417 | £71,376 |
| 9 | £64,000 | £105,153 | £80,591 |
| 10 | £70,000 | £121,271 | £90,237 |
| 11 | £76,000 | £138,901 | £100,345 |
| 12 | £82,000 | £158,184 | £110,947 |
| 13 | £88,000 | £179,277 | £122,079 |
| 14 | £94,000 | £202,348 | £133,776 |
| 15 | £100,000 | £227,583 | £146,077 |
| 16 | £106,000 | £255,186 | £159,023 |
| 17 | £112,000 | £285,378 | £172,658 |
| 18 | £118,000 | £318,402 | £187,028 |
| 19 | £124,000 | £354,524 | £202,180 |
| 20 | £130,000 | £394,035 | £218,168 |
Frequently asked questions
What is compound interest?+
Compound interest is interest calculated on the initial principal and on the accumulated interest from previous periods, causing wealth to grow exponentially over time.
How often should I contribute?+
Consistent monthly contributions typically outperform occasional lump sums because they benefit from pound-cost averaging and more compounding periods.
Does inflation affect my returns?+
Yes, UK inflation erodes purchasing power. Use the inflation input to see the 'real' value of your future balance in today's pounds.
What's a realistic long-term return in the UK?+
The FTSE All-Share and global trackers held by UK investors have returned roughly 6 to 9% a year over long horizons before charges, but past performance doesn't guarantee future results.
Is compound growth inside an ISA tax free?+
Growth and income inside a stocks and shares ISA are free of UK income tax and capital gains tax, up to the £20,000 annual ISA allowance.
How this calculator works
Compound interest is the return you earn on your original capital plus the returns already added to it. Because each period's growth is calculated on a larger balance, the effect accelerates the longer money stays invested.
This calculator models a starting lump sum plus a fixed monthly contribution, compounded monthly at the annual growth rate you choose. It also converts the final balance into today's pounds using your inflation assumption, so you can see purchasing power rather than just a headline figure.
Formula and methodology
Bₙ = Bₙ₋₁ × (1 + r/12) + C | Real value = Bₙ ÷ (1 + i)^y- B
- — balance at the end of a month
- r
- — annual growth rate (decimal)
- C
- — monthly contribution
- i
- — annual inflation rate (decimal)
- y
- — number of years elapsed
- Start with your initial lump sum.
- Each month, apply one twelfth of the annual growth rate to the running balance.
- Add the monthly contribution after growth is applied (contributions are treated as end-of-month).
- Repeat for every month in the term and record the balance at each year end.
- Discount the nominal balance by your inflation rate to show the real, inflation-adjusted value.
Worked examples
Regular ISA saver
- • £10,000 starting balance
- • £500 a month
- • 7% annual growth
- • 20 years
About £299,000 nominal, of which roughly £169,000 is investment growth rather than contributions.
Lump sum only
- • £20,000 starting balance
- • £0 a month
- • 5% annual growth
- • 10 years
About £32,900 nominal, or roughly £24,500 in today's money at 3% inflation.
Assumptions
- Growth is applied monthly at a constant rate, with no variation between years.
- Contributions are made at the end of each month and never change.
- All income and dividends are reinvested immediately.
- No platform fees, fund charges or trading costs are deducted.
- No tax is deducted, which reflects money held inside an ISA or pension wrapper.
Limitations
- Real markets are volatile; a smooth annual return understates sequence-of-returns risk.
- Charges of 0.3% to 1% a year can materially reduce the outcome over long periods.
- Outside a tax wrapper, income tax, dividend tax and capital gains tax may apply.
- Inflation is treated as constant, whereas UK CPI has ranged widely in recent years.
Noviqen provides general information, not personalised financial advice. See our editorial policy.
UK context
UK adults can pay up to £20,000 into ISAs in the 2026/27 tax year. Growth and income inside a stocks and shares ISA are free of UK income tax and capital gains tax, so a compounding model without tax is a reasonable proxy for ISA money.
Cash savings outside an ISA are covered by the personal savings allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate, nil for additional-rate). Interest above that is taxed at your marginal rate.
The Bank of England targets 2% CPI inflation; the latest reading is 2.9% and Bank Rate is 3.75% (last decision 30 July 2026), so cash returns above inflation are currently thin.