How to use this calculator
- Enter what you are starting with, or zero if you are beginning from nothing.
- Set the annual rate and how many years the money stays invested.
- Add a regular contribution if you save monthly. This changes the outcome enormously.
- Choose how often interest compounds; monthly is typical for savings accounts.
- Read the final balance and, more importantly, how much of it is interest rather than your own money.
What this projection shows
- The final balance after compounding over the full term.
- How much you contributed versus how much the interest added.
- A year-by-year table for the first five years and every fifth year after.
- Daily, monthly, quarterly and yearly compounding.
- The growth multiple, which is the clearest single measure of what compounding did.
- Calculation in your browser. No financial figures are transmitted.
Why compounding feels slow and then does not
Compound interest means interest earns interest. The first year is unremarkable, five per cent on £1,000 is £50, which is roughly what simple interest would give. The difference only becomes visible over time, because each year's interest is calculated on a slightly larger balance than the last.
Over ten years at five per cent, £1,000 becomes about £1,629 rather than the £1,500 simple interest would give. Over thirty years it becomes £4,322 rather than £2,500. The gap is not linear, which is precisely why people underestimate it and why starting early matters more than the rate.
Regular contributions dominate the outcome
The single biggest lever in most real savings plans is not the interest rate but the amount added each month. £1,000 at five per cent for twenty years grows to about £2,653. The same £1,000 with £100 added monthly reaches roughly £43,000, and only about £16,000 of that is interest.
That is worth sitting with. Chasing a percentage point of extra return matters far less than increasing what you put in, particularly in the early years when the balance is small.
The rule of 72
A useful mental shortcut: divide 72 by the interest rate to get roughly how many years the money takes to double. At six per cent, twelve years. At eight per cent, nine years. At two per cent, thirty-six years.
It works because of the mathematics of exponential growth and it is accurate enough for rates between about four and twelve per cent. Being able to do it in your head is a good defence against financial claims that sound impressive.
What this projection deliberately ignores
- Inflation. £43,000 in twenty years buys considerably less than £43,000 today. Subtract inflation from the rate to see growth in real terms.
- Tax. Interest is usually taxable outside a tax-sheltered account, which reduces the effective rate.
- Fees. A one per cent annual management charge is a one per cent reduction in your return, compounded, which over decades is enormous.
- Variability. A constant rate is a modelling convenience. Real investment returns move, and the order in which good and bad years arrive affects the outcome.
Nominal rate and compounding frequency
The rate quoted is nominal. The effective annual rate depends on how often interest is added. Five per cent compounded monthly gives an effective 5.12 per cent; compounded daily, 5.13 per cent. The difference between monthly and daily is small, and the difference between yearly and monthly is worth noticing.
For interest that does not compound at all, the simple interest calculator shows the contrast directly. The percentage calculator handles one-off percentage arithmetic. Nothing you enter here is transmitted anywhere.
One habit is worth more than any of this arithmetic: automate the contribution. Money moved on payday, before it is available to spend, gets saved. Money left to be transferred at the end of the month largely does not.