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Compound Interest Calculator
See how your money grows over time with the power of compounding.
How Compound Interest Works
The Compound Interest Formula
Where P is the principal, r is the annual rate, n is the compounding frequency per year, t is years, and PMT is the regular contribution. Unlike simple interest (which only grows linearly), compound interest earns interest on previously earned interest — creating exponential growth.
Simple vs Compound Interest
With simple interest, a £10,000 deposit at 7% earns £700 every year — always £700. With compound interest, you earn £700 in year one, then £749 in year two (7% of £10,700), then £801.43 in year three, and so on. After 30 years, simple interest gives you £31,000 while compound interest gives you over £76,000.
The Power of Compounding Over Time
Short-Term Savings (1-5 years)
Over short periods, the difference between simple and compound interest is modest. A £10,000 deposit at 5% earns roughly £2,763 with compounding over 5 years versus £2,500 with simple interest. The benefit is real but not dramatic.
Long-Term Wealth Building (20-30 years)
Over decades, compounding becomes extraordinary. £10,000 at 7% for 30 years grows to £76,123 — more than seven times your original deposit. Add £200 monthly contributions and the total reaches over £320,000, with more than half coming from interest alone.
How to Use This Compound Interest Calculator
Enter Your Starting Amount
Your initial deposit or current savings balance.
Set Contributions & Rate
Add your monthly contribution and expected annual rate.
See Your Projected Growth
Instantly view your balance, chart, and year-by-year breakdown.
Tips for Maximising Compound Interest
- Start early. Time is the most powerful factor in compounding. Starting 10 years earlier can double your final balance, even with the same contributions.
- Increase contributions over time. As your income grows, increase your monthly contributions. Even small increases compound significantly over decades.
- Reinvest returns. Whether dividends, interest, or capital gains — reinvesting keeps the compounding engine running at full speed.
- Choose higher compounding frequency. Monthly compounding earns slightly more than annual. Daily earns slightly more than monthly. When comparing savings accounts, check the AER for a true comparison.
Want deeper insights?
ARIA analyses your entire portfolio with institutional-grade risk management, position sizing, and optimisation. See how your real investments compound — not just projections.
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