Compound interest calculator
Your investment plan
What is investment compounding?
Compounding is an incredibly powerful part of investing.
It’s what happens when money you invest earns a return which, when added to your initial investment and reinvested as a total, provides more potential for growth. The same principal applies to compound interest on cash savings.
When this process continues uninterrupted and at a steady growth rate, it can be a bit like a snowball rolling down a hill.
Over time it can lead to your investments growing more and more. The rate of growth will depend on the ups and downs of the stock market, so there is a risk you get back less than you put in.
The figures shown in this video aren’t guaranteed. And they don’t take inflation or charges into account.
This information is not personal advice. If you're not sure which investments are right for you, please ask for advice, for example from our financial advisers.
How could compounding help your investments?
The compound returns calculator allows you to see the potential power of compounding for yourself. Enter how much you intend to invest each month, as well as any lump sums you’ll be investing at the start.
You can then compare how different timescales and growth rates can impact how your investment might grow.
It’s important to remember that this calculator assumes you’ve got a steady growth rate over time. In the stock market, your rate of return will continually change and will fall as well as rise in value. Therefore, you can use this calculator as a guide to help you see what compound growth might be possible through investing, but you shouldn’t use it as a financial planning tool.
How to benefit from investment compounding
The best thing about compounding is that you don’t really need to do anything to benefit from it once you start. In fact, it works best when you do nothing. Just leave your money invested.
So long as you check you’re diversified enough, and your investments are still in line with your goals, time will do the work.
One of the best ways to start benefiting is by investing monthly. The earlier you start, the better your chance of reaching your goals sooner.
Compound interest in a savings account
Compound interest also applies when you hold your money in cash in a savings account. This is a good option if you know you might need to access that cash quickly and easily. But for money you don’t need to touch for at least five years, investing gives you the chance to grow your money more than you could with cash.
This is never a guarantee and investments can fall as well as rise in value.