Compound Interest Calculator
Advanced calculator with interactive graphs to visualise your investment growth over time
Investment Summary - 5 years
Performance Statistics
Investment Growth Visualisation
Final Value Breakdown
Year-by-Year Breakdown
| Year | Deposits | Interest | Total Deposits | Accrued Interest | Balance |
|---|
What is Compound Interest?
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. It's often called "interest on interest" and can significantly boost your investment returns over time.
Formula: A = P(1 + r/n)^(nt)
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (decimal)
- n = Number of times interest compounds per year
- t = Time in years
The Power of Starting Early
Time is your greatest asset when investing. Starting early allows compound interest to work its magic over longer periods, potentially turning modest investments into substantial wealth.
Example: £1,000 invested at 7% annual return:
- After 10 years: £1,967
- After 20 years: £3,870
- After 30 years: £7,612
- After 40 years: £14,974
Regular Contributions Matter
Regular monthly contributions can dramatically increase your final investment value. This strategy, known as pound-cost averaging, also helps reduce the impact of market volatility.
Benefits:
- Builds discipline and consistency
- Reduces market timing risk
- Takes advantage of compound growth
- Creates substantial wealth over time
Tax and Inflation Considerations
Understanding the impact of taxes and inflation on your investments is crucial for realistic planning. Our calculator includes these factors to give you a more accurate picture.
Key Points:
- Tax on capital gains reduces net returns
- Inflation erodes purchasing power
- ISAs offer tax-free growth in the UK
- Real returns matter more than nominal returns