Compound Interest Calculator
See exactly how your investment grows over time with compound interest. Year-by-year chart included.
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Calculator results are estimates based on your inputs. They are useful for learning, planning, and comparison, but they are not professional advice.
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Finance outputs are educational projections, not investment, tax, legal, or financial advice.
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How does compound interest work?
Compound interest means you earn interest on your interest. Each period, earned interest is added to your balance. The next period, interest is calculated on the new, larger balance — not just the original amount.
This creates a snowball effect. Slowly at first, then dramatically faster over time.
Simple vs compound interest — the key difference
| Year | Simple (8%) | Compound (8%) |
|---|---|---|
| 1 | £10,800 | £10,800 |
| 5 | £14,000 | £14,693 |
| 10 | £18,000 | £21,589 |
| 20 | £26,000 | £46,610 |
| 30 | £34,000 | £100,627 |
Starting with £10,000. Simple interest earns the same £800/year forever. Compound interest earns more each year.
The Rule of 72
To estimate how many years it takes to double your money: divide 72 by your interest rate.
- 6% rate → doubles in 12 years
- 8% rate → doubles in 9 years
- 12% rate → doubles in 6 years
Why starting early makes such a difference
At 8% compound interest, £10,000 invested at age 25 grows to £217,000 by age 65 (40 years). The same £10,000 invested at age 35 grows to only £100,000 by age 65 (30 years). Starting 10 years earlier more than doubles the outcome.
Frequently asked questions
What is compound interest in simple terms?
You earn interest, then earn interest on that interest. The longer you wait, the faster your balance grows — because the base keeps getting bigger.
Is compound interest always good?
For savings and investments, yes. For debt (credit cards, loans), compound interest works against you — your balance grows faster than expected if you only pay the minimum.
How often does interest compound on savings accounts?
Most savings accounts compound monthly or daily. Check your account's terms — the Annual Equivalent Rate (AER) already factors in compounding frequency.