Compound Interest Calculator
Calculate how your money grows with compound interest over time. See year-by-year breakdown and future value.
Results are for general guidance only — not professional advice. Learn more.
How to use this tool
Enter your investment details to see how compound interest grows your money over time. Results update as you type.
- Enter your Initial Principal — the lump sum you are investing today.
- Enter the Annual Interest Rate as a percentage.
- Set the Time Period in years (up to 50).
- Choose your Compounding Frequency — how often interest is calculated and added to your balance.
- Optionally, add a Monthly Contribution to model regular savings or top-ups.
- Read off your Final Amount, Total Interest Earned, total contributions, and the Effective Annual Rate (AER).
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Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal, compound interest grows exponentially over time — meaning your returns earn their own returns.
How is compound interest calculated?
The compound interest formula is: A = P × (1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual interest rate as a decimal, n is the compounding frequency per year, and t is the number of years.
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously earned interest, so the interest amount grows each period. Over long periods, the difference becomes very significant — compound interest can produce dramatically larger returns.
How does compounding frequency affect returns?
More frequent compounding produces slightly higher returns. For example, £10,000 at 5% annual rate for 10 years gives £16,289 compounded annually, £16,351 compounded monthly, and £16,387 compounded daily. The effect is most pronounced over longer time periods and at higher interest rates.