Compound Interest

See how an investment grows over time with compound interest. Add a regular monthly contribution to model a savings account or investment portfolio, and compare compounding frequencies.

Compound Interest Formula
A = P(1 + r/n)^(nt) + C × [(1 + r/n)^(nt) − 1] / (r/n) P = principal r = annual rate n = compounds/year t = years C = regular contribution per period

Compound interest earns returns on both the principal and previously accumulated interest. Daily compounding yields slightly more than monthly (e.g. 7% daily vs monthly differs by ~0.06% over 10 years). For most savings accounts and ISAs, monthly compounding is standard.

How to use
Compound interest basics

Unlike simple interest (which only earns on the principal), compound interest earns on both the principal and previously accumulated interest. The more frequently it compounds, the more you earn.

Regular contributions

Enter a monthly contribution amount to simulate regular saving — like a pension contribution or monthly savings transfer. Leave it at 0 for a lump-sum-only calculation.

Compounding frequency

Daily compounding yields slightly more than monthly, which yields more than annual. For most savings accounts and ISAs, monthly is standard. For credit cards, it's typically daily — which works against you.

Formula
A = P(1 + r/n)^(nt) + C × [(1 + r/n)^(nt) − 1] / (r/n) P=principal, r=annual rate, n=compounds/year, t=years, C=regular contribution
Tips
  • •Starting 10 years earlier often doubles the final balance — the power of compounding over time.
  • •Even a 1% difference in annual rate makes a massive difference over 20–30 years.
  • •Use the Retirement Calculator to model a long-term investment with inflation adjustment.