Calculate the future value of an investment with compound interest — enter your principal, monthly contributions, interest rate and time horizon to see projected returns.
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Enter your initial investment, monthly contribution, expected annual return and time horizon to see projected returns with compound interest.
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See your full investment projection including principal, interest earned, total value and growth chart. Use Copy or Download to save your results.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (calculated only on principal), compound interest grows exponentially — making it the most powerful force in long-term investing. Einstein reportedly called it the eighth wonder of the world.
More frequent compounding produces higher returns. Daily compounding yields slightly more than monthly, which yields more than annually. The difference grows significantly over long time horizons. For example, £10,000 at 7% for 30 years: annual compounding gives £76,123 while monthly compounding gives £81,164 — a difference of over £5,000.
The S&P 500 has returned approximately 10% annually before inflation over the long term (around 7% after inflation). UK equities (FTSE All-Share) have returned around 6-8% annually over long periods. For conservative projections use 5-6%, moderate use 7-8%, optimistic use 9-10%. Past performance does not guarantee future results.
A common guideline is to invest 15-20% of your gross income for retirement. If you are starting later, you may need to save more. Even small amounts invested consistently make a significant difference due to compounding. £200/month at 7% for 30 years grows to over £227,000 — yet total contributions are only £72,000.
The Rule of 72 is a quick mental calculation to estimate how long it takes to double your investment. Divide 72 by your annual interest rate: at 6% your investment doubles in 12 years; at 8% it doubles in 9 years; at 12% it doubles in 6 years. It is accurate for rates between 6% and 10%.
Nominal return is the raw percentage gain on your investment. Real return adjusts for inflation — it shows your actual increase in purchasing power. If your investment returns 8% but inflation is 3%, your real return is approximately 5%. For long-term planning, always consider real returns to understand what your future money can actually buy.
Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals regardless of market conditions. When prices are low you buy more shares; when prices are high you buy fewer. Over time this reduces the average cost per share and removes the pressure of trying to time the market. The monthly contribution feature of this calculator models DCA.
Taxes can significantly erode investment returns. In a taxable account, dividends and capital gains are taxed annually. In tax-advantaged accounts (ISA in the UK, 401k/IRA in the US), investments grow tax-free or tax-deferred — significantly improving long-term outcomes. Always use tax-advantaged accounts before taxable ones when possible.
