Compound Interest Calculator

Calculate your potential future savings or investment growth with the power of compound interest.

Initial Deposit (£):

Monthly Contributions (£):

Annual Interest Rate (%):

Time Period (Years):

Annual Inflation Rate (%):

Enable Inflation Adjustment:

Final Balance:
Total Interest Earned:
Total Contributions:

Understanding Compound Interest

Compound interest is the interest you earn on interest. It's often called "interest on interest," and it makes your money grow faster because you earn returns not only on your initial principal but also on the accumulated interest from previous periods.

How Does Compound Interest Work?

Imagine you invest £100 with a 10% annual interest rate. After one year, you earn £10 in interest, bringing your total to £110. In the second year, you earn 10% interest on £110 (not just the original £100), meaning you earn £11, bringing your total to £121. This snowball effect is the power of compounding.

Key Components of the Calculator:

Initial Deposit: The amount of money you start with.
Monthly Contributions: Regular additional payments you make to your investment.
Annual Interest Rate: The percentage return your investment earns each year.
Time Period (Years): The duration over which your money will grow.
Annual Inflation Rate: The percentage at which the cost of goods and services is rising each year, eroding purchasing power.
Enable Inflation Adjustment: Toggling this on will use the specified annual inflation rate to show you the "real" purchasing power of your future money, giving a more realistic view of your returns after accounting for rising prices.

Why is Compound Interest Important?

Wealth Accumulation: It's a fundamental principle for long-term wealth building, especially for retirement savings and significant financial goals.
FIRE Movement: Central to the Financial Independence, Retire Early (FIRE) movement, as it allows investments to grow exponentially over time.
Time is Your Ally: The longer your money compounds, the more significant the returns. Starting early gives your investments more time to grow.

How This Tool Works

This Compound Interest Calculator operates entirely client-side within your browser. No data is sent to a server, ensuring your privacy. It uses JavaScript to perform the calculations based on the inputs you provide, offering immediate results.