Compound Interest Calculator

What is compound interest?

Compound interest can be summarised as the “interest on interest”. As your investment portfolio generates returns, those returns can start to generate their own set of returns.

For example, if you deposit £10,000 in an account that paid 10% annual interest, you’d have earned £1,000 in interest after a year. In year two, you’d then earn 10% on the £11,000, giving you a further £1,100. This means that you’d end up with £12,100 after two years, not £12,000.

This extra £100 that you have earned is the effect of compound interest, and it tends to grow over time - that’s why your earliest contributions are often your most important. The effect this can have on an investment with a long time horizon, such as a pension, can transform an investor’s future.

How the calculator works

For those looking to estimate how much they'll need to invest per month to achieve their goals, we’ve created this handy tool to help you. First, simply pick your desired risk level and the time horizon. From here, enter in your existing assets as the initial deposit, then you’re free to enter in as many different amounts for the monthly contribution to see the average projected value outcome.  If you’re not reaching your intended target, think about whether you’d like to increase your time frame for the investments or adopting a different risk level.

By making an investment, your capital is at risk. The value of your Moneyfarm investment depends on market fluctuations outside of our control and you may get back less than you invest. Past performance is no indicator of future performance. The tax treatment of a Moneyfarm Stocks and Shares ISA and a Moneyfarm Pension depends on your individual circumstances and may be subject to change in the future. You should seek financial advice if you are unsure about investing.

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Compound interest calculator

See how much your wealth can grow

What is compound interest?

How the calculator works

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