Compound Interest Calculator 2026-27
See how your money grows when you give it time.
Calculate the power of compound interest on any investment in United Kingdom. Enter your initial investment, interest rate, and time period. Optionally add monthly contributions. Shows final balance and total interest earned.
Past returns do not guarantee future results. Always consider risk before investing.
How compound interest works in the UK
Compound interest earns interest on interest. Over time, this creates exponential growth — Einstein called it "the eighth wonder of the world". Understanding the formula and levers lets you project and optimise long-term savings.
The compound interest formula
A = P(1 + r/n)^(nt), where P = principal, r = annual rate, n = compounding frequency, t = time in years. £10,000 at 7% compounded annually for 10 years: £10,000 × 1.07^10 = £19,672.
Compound vs simple interest
Simple interest: earns only on original principal. Compound: earns on principal plus accumulated interest. £10,000 at 7% for 20 years: simple = £24,000, compound = £38,697. The £14,697 gap is pure interest-on-interest.
The three levers: rate, time, contribution
Doubling the rate (4%→8%) dramatically increases final balance. Doubling the time period more than doubles growth. Increasing contributions linearly increases balance. Starting earlier beats finding a higher rate for most real-world scenarios.
Monthly contribution compounding
£200/month at 7% for 30 years = £244,000 (contributed £72,000, interest £172,000). The same amount contributed lump sum would grow to more, but the monthly approach is realistic for most savers and smooths market timing risk.
Rule of 72: how long it takes money to double
A quick mental shortcut: divide 72 by your annual interest rate to estimate doubling time. Works well for rates between 5-20% and is close enough for planning.
Doubling time at common UK rates
| Annual rate | Rule of 72 estimate | Exact doubling time |
|---|---|---|
| 2% (low savings account) | 36 years | 35.0 years |
| 4% (standard ISA) | 18 years | 17.7 years |
| 5% (higher-rate savings) | 14.4 years | 14.2 years |
| 6% (moderate investments) | 12 years | 11.9 years |
| 7% (stock market historical) | 10.3 years | 10.2 years |
| 8% (aggressive portfolio) | 9 years | 9.0 years |
| 10% (ambitious target) | 7.2 years | 7.3 years |
When the rule breaks down
Rule of 72 works for moderate rates. At very low rates (under 2%), use Rule of 69.3 for accuracy. At very high rates (25%+), the rule underestimates. For rates 5-20%, it's accurate within 0.5%.
Using Rule of 72 in reverse
If you want money to double in 10 years, target a 7.2% return. If you want it to double in 15 years, 4.8% will do. This helps set realistic expectations and choose appropriate savings vehicles.
Where to compound money tax-efficiently in the UK
ISA wrappers — tax-free compounding
£20,000 annual allowance across all ISA types. Cash ISAs at 4-5% Ofgem. Stocks & Shares ISAs for long-term (5+ years), targeting 6-8% average. Lifetime ISAs add 25% government bonus for first home or retirement. Interest and capital gains compound tax-free.
Pensions (SIPP and workplace)
Contributions receive tax relief at your marginal rate (20-45%). This is equivalent to an instant uplift: a £100 SIPP contribution costs a 40% taxpayer £60. Growth inside is tax-free. At retirement, 25% tax-free, rest taxed as income. Unbeatable for long-term compounding.
Premium Bonds
NS&I prize-based saving. No interest, but tax-free prizes averaging ~4% for typical holdings. Excellent for cash above the Personal Savings Allowance. Maximum holding £50,000 per person.
Regular saver accounts
Best rates in the UK market (up to 7-8% Ofgem) but capped at £200-500/month. Useful for supercharging smaller amounts. Usually requires you to hold a current account with the same bank.
Fixed-rate bonds
1-5 year locks at 4.5-5.5% Ofgem. Interest compounds if added to balance. Cannot withdraw early without penalty. Good for medium-term goals where timing is certain.
UK compound interest projections by contribution and term
£200/month at various rates and durations
| Years | 4% return | 6% return | 8% return |
|---|---|---|---|
| 10 years | £29,400 | £32,800 | £36,800 |
| 20 years | £73,300 | £92,400 | £117,800 |
| 30 years | £138,900 | £201,900 | £300,000 |
| 40 years | £236,800 | £398,000 | £700,000 |
£500/month at 6% return by duration
| Years | Total contributed | Final balance | Interest earned |
|---|---|---|---|
| 10 | £60,000 | £82,000 | £22,000 |
| 20 | £120,000 | £231,000 | £111,000 |
| 30 | £180,000 | £505,000 | £325,000 |
Starting early: the 10-year lead
Saver A: £200/month from age 25-35 (10 years, £24,000 contributed), then stops but leaves invested until 65. At 7%: final balance £146,000.
Saver B: £200/month from age 35-65 (30 years, £72,000 contributed). At 7%: final balance £244,000.
Saver A contributed 3x less but gets 60% of the balance. Starting early matters more than contributing more.
FAQFrequently asked questions about UK compound interest
What is a realistic long-term investment return?
UK stocks (FTSE All-Share) have historically returned 7-8% annually before inflation, 4-5% after. Cash savings 4-5% Ofgem currently. Bonds 4-5%. Individual results vary significantly — use conservative estimates (5-6% nominal) for planning.
Does compounding frequency matter much?
At 7% over 10 years on £10,000: annual = £19,672, monthly = £20,097, daily = £20,137. Difference is small. Interest rate and time horizon matter far more than frequency.
How much does £100/month grow in 30 years at 7%?
£100/month at 7% for 30 years = approximately £122,000. You contribute £36,000 total — the other £86,000 is compound interest. Starting early is the biggest lever.
What's better: ISA or pension for compounding?
Pension for long-term retirement savings (tax relief on contributions + tax-free growth). ISA for flexibility (tax-free growth, accessible anytime). Use both — pension for retirement, ISA for earlier goals.
Can compound interest make me rich?
Yes, given time and contributions. £500/month at 7% for 40 years = £1.3 million. Starting at 25 with this plan gets you there by 65. The key is consistent contributions and not interrupting compounding by withdrawing.
How does inflation affect compound interest?
Inflation erodes purchasing power. Nominal 6% return with 2.5% inflation = 3.5% real return. Always compare to inflation. A 4% cash ISA during 5% inflation is losing real value.
Where these figures come from
Savings and interest figures on this page are drawn from The Bank of England (Bank Rate), HMRC (ISA and savings tax rules), the Financial Services Compensation Scheme (deposit protection), and the Financial Conduct Authority (consumer protection).
- Bank Rate (base rate) — Bank of England — The Interest Rate (Bank Rate).
- ISA annual allowance & rules — GOV.UK — Individual Savings Accounts (ISAs).
- Personal Savings Allowance — GOV.UK — Tax on savings interest.
- FSCS deposit protection (£85,000) — FSCS — Financial Services Compensation Scheme.
- Consumer money guidance — MoneyHelper — Savings.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
Your result shows the projected growth or return based on the rate, contribution, and time period you entered — using standard compound or simple interest formulas.
Use this to set savings targets, compare investment options, or understand the impact of starting earlier. Adjust the rate and timeframe to model optimistic and conservative scenarios.
Not a guaranteed return. Actual investment outcomes depend on market conditions, fees, taxes, and timing that cannot be predicted with certainty.
Uses standard financial formulas with the inputs you provided. All calculations run in your browser — no data is sent to any server.
Savings and investment results are dominated by three factors: the rate of return, the time horizon, and regular contributions. Compounding amplifies all three over time.
Returns on returns accelerate growth over time. The difference between 5% and 7% over 20 years is much larger than the 2% gap suggests — compounding is non-linear.
Adding even small regular amounts dramatically increases the final balance. £100/week invested at 7% for 20 years grows to over £110,000 in contributions and £110,000+ in returns.
Starting 5 years earlier often produces a larger final balance than doubling your contribution rate. Time is the most powerful variable in savings calculations.
To improve your savings outcome, focus on starting earlier, increasing contributions, and minimising fees and tax drag on returns.
Starting with a small amount today and increasing over time beats waiting to start with a larger amount. Time in the market matters more than timing the market.
A 1% annual fee on a £100k balance costs £1,000/year and compounds against you. Compare fee structures across savings and investment products.
Super, offset accounts, and tax-free thresholds reduce the drag of tax on your returns — letting more of the growth compound for you.
Savings decisions connect to investment, tax, and retirement planning. Use these calculators to model the broader picture.
Work backwards from a target amount to see how much you need to save each month.
Savings goal →Model how an initial investment grows with regular contributions over different time periods.
Compound interest →See what your future balance is worth in today's dollars after adjusting for inflation.
Inflation calculator →