Calculate compound interest, investment growth, and plan your financial future
Plan your investment strategy with our comprehensive calculator. See how compound interest works with regular contributions to grow your wealth over time. Perfect for ISAs, pensions, and general investment planning.
Compound interest is often called the "eighth wonder of the world." When you invest, you earn returns not just on your initial investment, but also on the returns you've previously earned. This creates a snowball effect that accelerates your wealth growth over time.
Different investment types typically offer different return potentials. Cash ISAs offer 3-4% annually (low risk, low return), government bonds 2-5% annually (low to moderate risk), corporate bonds 3-7% annually (moderate risk), stock market index funds 6-8% annually (moderate to high risk), and individual stocks have highly variable returns (high risk, high potential return).
Stocks & Shares ISA: Invest up to £20,000 per year tax-free. Perfect for long-term growth investments.
Pension (SIPP): Get tax relief on contributions plus tax-free growth. Annual allowance of £60,000.
General Investment Account: No contribution limits but subject to capital gains tax on profits above £6,000 annual allowance.
Making regular monthly contributions offers several advantages: pound-cost averaging smooths out market volatility, builds investing discipline and habit, takes advantage of compound growth over time, and reduces the impact of market timing.
Remember that all investments carry risk. Past performance doesn't guarantee future returns, markets can fall as well as rise, you should consider your risk tolerance and investment timeline, diversification helps manage risk, and you should seek professional advice for large sums.
How accurate is this investment calculator?
Our calculator uses standard compound interest formulas and provides estimates based on the returns you specify. Actual investment returns will vary based on market performance and fees.
What about inflation?
The returns shown are nominal (not adjusted for inflation). Inflation typically averages 2-3% annually, so subtract this from your returns for "real" purchasing power growth.
Should I invest a lump sum or regularly?
Both strategies have merits. Regular investing (pound-cost averaging) can reduce timing risk, while lump sum investing maximises time in the market. Consider your circumstances and risk tolerance.
What about fees?
Investment fees (platform charges, fund management fees) will reduce your actual returns. Factor in annual fees of 0.2-2% depending on your investment choices. Low-cost index funds typically charge 0.1-0.5% annually.